Financial literacy is having the knowledge, skills and confidence to make responsible financial decisions.
- Knowledge refers to an understanding of personal and broader financial matters;
- Skills refer to the ability to apply that financial knowledge in everyday life;
- Confidence means having the self-assurance to make important decisions; and
- Responsible financial decisions refers to the ability of individuals to use the knowledge, skills and confidence they have gained to make choices appropriate to their own circumstances.
Armed with financial knowledge, skills and confidence, Canadians are better able to:
- Make day-to-day choices about how to spend their money and stay on top of financial obligations;
- Navigate the ever-changing financial marketplace and buy the products and services that make the most sense for their own needs;
- Plan ahead about how to use their hard-earned dollars for life goals, such as buying a home or preparing for retirement;
- Deal with local, provincial and national government programs and systems that are often complicated and confusing, even to experts;
- Evaluate the financial information and advice they get, whether from friends, the media or professionals;
- Make the best use of the resources they have, including workplace benefits, private and public pensions, tax credits, public benefits, investments, home equity, access to credit and consumer spending power.
Source: Canadians and their Money, 2010