November is Financial Literacy Month, which conveniently follows Small Business Month. ‘Financial literacy’ refers to the skills, knowledge, and confidence to make confident financial decisions. The theme for Financial Literacy Month 2014 is Strengthening Financial Literacy through Collaboration.
According to a 2011 Ipsos Reid study, 72% of Canadians aren’t confident their math and money management skills will help develop a strong financial future. The same study found that 35% of Canadians don’t have any savings or investments. Further, the average RRSP savings are $55,000 – not nearly enough to be feeling secure in your financial future. Beyond just personal security, financial literacy also has significant effects on social well-being, can increase opportunities for social and familial interaction, and improves your employability, career achievement, and participation in community activities.
Financial literacy is especially important for the success and sustainability of startups. Industry Canada has found that 85% of businesses survive their first year, however, after year two, this number drops to 70%, and looking forward five years, only 51% of those businesses still exist. Compare this with research from Intuit Canada which says that 58% of Canadian small-business owners started their businesses with $5,000 or less. Of those businesses, 50% of them reported using this seed money in conjunction with lines of credit, which is a fairly high risk situation when entering into a new venture. Taking the time at the beginning of their ventures to focus on financial literacy, nail down the basics and learn to capitalize on sound investments and prudent financial practices, could be what gives startups that extra edge they need to survive beyond their early years.
Last April, the federal government made a public and positive move to support this issue, announcing the appointment of Jane Rooney as Canada’s first Financial Literacy Leader. The mandate of this role is to collaborate and coordinate activities with stakeholders so they may contribute to and support initiatives that strengthen the financial literacy of Canadians. To help her develop a national strategy in this area, Rooney is conducting consultations across the country, and all Canadians are encouraged to submit comments on a consultation paper by December 10, 2014.
Looking to Participate in Financial Literacy Month?
There are a number of ways you can sharpen your financial smarts this November. Throughout the month, Startup Canada is hosting a series of #Startupchats and Google Hangouts with Intuit Canada on financial topics that are top of mind for entrepreneurs:
- 10 Ways to Finance Your Startup – November 5 (#StartupChats)
- The 3 F’s of Startup Success – November 17 (Google Hangout)
- Getting Out of Your Own Way – November 19 (#StartupChats)
Looking for Other Tools to Improve your Financial Literacy
Whether you’re a business owner, thinking of starting a business, or just an everyday Canadian, it is useful to know how your financial literacy stacks up. Take the financial literacy self-assessment quiz.
Want to brush up on the basics, or take your basics to the next level? Here are three resources to help:
• QuickBooks is offering one year free for Canadian startups
• The Financial Consumer Agency of Canada has a resource database
• ABC Life Literacy Canada also has a resource database
Stay up-to-date with Financial Literacy Month discussions on Twitter with hashtag: #FLM2014