Mike Schilling: Financial Literacy Month November misses the point

Opinion: Efforts must be focused on tackling wealth inequality head-on, not teaching Canadians how to manage money they don’t have. For starters, companies need to pay their employees a living wage,

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Financial literacy is important. This year, Financial Literacy Month is all about helping Canadians understand how to manage their finances in these incredibly difficult times. He advises workers to borrow only what they need, build an emergency fund, and learn about financial products and services.


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With unemployment rates rising across Canada as a result of the pandemic, providing Canadians with the tools and resources to more effectively manage their finances is essential.

But November’s Financial Literacy Month misses the big picture. The existence of Financial Literacy Month implies that financial literacy is a solution to Canada’s larger problems regarding social mobility and wealth inequality: if people know how to better manage their money, they will become more financially stable. .

But, for many, focusing on financial literacy isn’t helpful – instead, it covers the problem without addressing the root of the problem. The unspoken and indelible truth is that financial education is only useful for people who have money in the first place.


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More than half of the people who use payday loans live in households that earn less than $ 55,000 per year, and more than 70% live in households with incomes of less than $ 80,000. Additionally, 41% of people who typically use a payday loan reported doing so for recurring and expected necessary expenses, such as rent or utility bills. In fact, only seven percent of respondents used a payday loan for anything other than a necessary expense.

Low-income households are trapped in debt cycles not because they mismanaged their money, but because they don’t have the money in the first place. Payday loans exist because people cannot make ends meet.

Financial literacy is important, but teaching financial literacy to people without basic means is unnecessary at best and unfair at worst. Efforts must be focused on tackling wealth inequalities head-on, not teaching Canadians how to manage money they don’t have.


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And while wealth inequality seems like an impossible problem, there are actually relatively simple steps we can take to address it – if we want to.

For starters, companies must pay their employees a living wage, defined as the minimum income necessary for a worker to meet his or her basic needs. Public appetite for change is already there: A 2020 Community Savings Credit Union poll, conducted with Angus Reid, found that nearly three-quarters of British Columbians support a living wage for all. And as the CEO of BC’s first financial institution to pay its employees a living wage, I can attest to the fact that the return on investment is substantial, ranging from employee retention and satisfaction to employee satisfaction. improved job performance and productivity.


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Paying workers a living wage is good for business.

Second, all levels of government must prioritize the creation of affordable housing for low-income households. While we see positive movement here, there is still a long way to go. The fact remains that if you work for minimum wage, there is no area in Canada’s largest cities where you can rent an affordable apartment (no more than 30% of your income) at an affordable price (no more than 30% of your income). ‘one or two bedrooms.

Finally, we all need to take a hard look at how our own industries perpetuate the cycle of wealth inequality, and we need to be prepared to face some harsh realities.

Consider the financial services industry: is it fair that some financial institutions require individuals to provide an initial deposit to open a chequing account? Why do we pay higher interest rates on accounts with more savings than on accounts with only a few hundred dollars? And why do many institutions charge those with less savings just for holding bank accounts?


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The obvious industry response – that it’s good for business – is no longer enough. These policies serve to support and increase wealth inequalities in our society, thereby fostering the status quo. That’s why, in 2021, Community Savings Credit Union is focused on launching a small nonprofit loan product designed to provide people with a fair and affordable alternative to payday borrowing. But, there is always more we can do.

So back to Financial Literacy Month. Yes it’s important. No, that is not the answer to our problem.

Mike Schilling is President and CEO of the Community Savings Credit Union.

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About Monty S. Maynard

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