Albertans in debt struggling with financial literacy
MNP survey released Monday shows Albertans have low confidence in their understanding of how to pay down debt.
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If Albertans knew more about finance they wouldn’t be in so much debt, according to an Edmonton insolvency trustee.
The MNP Consumer Debt Sentiment Survey released Monday shows Albertans’ debts are increasing and most have low confidence in their understanding of interest rates and setting budgets.
“I don’t think that enough is being taught, from what I can understand … in terms of managing money and debt wisely,” said MNP licensed insolvency trustee Zaki Alam.
On Tuesday, Edmonton Public School Board Trustee Michael Janz will introduce a motion to rally the government for financial literacy and consumer rights education to be added to curriculum at all grade levels.
Alam said that would be useful to continue through post-secondary as well.
“I think it might be a good idea if they could do a bit more emphasis in, say, Grade 12 at school, or university. So that way they actually understand some of the basic pitfalls and how to be smart with your money,” he said.
Two thirds of Albertans surveyed said they are less than “very confident” in their understanding of the impact interest rates have on debt payments, and in their ability to set and follow a budget.
Nearly 70 per cent said they are less than very confident in their ability to create a “rainy day” savings fund.
More than half said they are concerned about their current level of debt, and 40 per cent are less than $200 away from not being able to meet their bill or debt obligations each month.
Alam said many Albertans who were used to high-paying jobs had to downgrade in the recession but haven’t reworked their budgets in the process.
Many, he said, are stuck in a cycle of managing minimum payments on their credit cards, while relying on low interest rates that are bound to rise again.
“You can only pay down so much of your expenses and then you start to hurt. So it’s basically a fine line, and that’s why financial literacy is quite important in terms of being aware of it before you go into it,” he said.