Majority of Canadians give themselves a passing grade in financial literacy: BMO survey

Most knowledgeable about RRSPs, TFSAs

Canadians are more knowledgeable this year than last year about financial terms, according to the second annual BMO Financial Literacy Report Card. 

Most Canadians gave themselves a passing grade on their level of personal finance knowledge, with nearly three-quarters giving themselves a B or C. Only one in 10 (10 per cent) believe they deserved an A, while three per cent gave themselves a failing grade, found the survey of 1,000 Canadians.

They feel most knowledgeable about:

•registered retirement savings plan (RRSP) — 79 per cent, up from 69 per cent

•tax-free savings account (TFSA) — 72 per cent, up from 64 per cent

•guaranteed investment certificate (GIC) — 62 per cent, up from 60 per cent.

Meanwhile, Canadians continue to feel least knowledgeable about:

•registered disability savings plan (RDSP) — 23 per cent, up from 15 per cent

•exchange traded funds (ETFs) — 24 per cent, up from 14 per cent

•dividend reinvestment plan (DRIP) — 25 per cent, up from 14 per cent.

One-half (50 per cent) of Canadians said their financial knowledge has increased since the financial downturn of 2008.

"Improving financial literacy among Canadians is critical to the financial well-being of families, as well as the overall economy," said Jacques Ménard, chairman of BMO Nesbitt Burns and Financial Literacy Task Force vice-chair. "Increasing financial literacy should continue to be a focus for all involved, including financial institutions."

A successful understanding of the financial literacy quiz is tied to age, with the majority (54 per cent) of those under 30 answering more than one-half of the questions incorrectly. Furthermore, nine in 10 (87 per cent) of young Canadians believe they would benefit from an introductory course on personal finance.

"While it's encouraging to see that Canadians are feeling more confident in their understanding of personal finance, there continues to be room for improvement, particularly among younger Canadians," said Gary Rabbior, president of the Canadian Foundation for Economic Education (CFEE). "This underscores a need for financial literacy programs targeted to younger age groups to ensure they have a solid base of financial knowledge early on in life."

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