Most people (91%) give themselves a passing grade for their level of financial literacy. That’s down slightly from 2012 (93%), and up from 2011 (89%), according to the BMO Financial Literacy Report Card.
Here’s how Canadians graded themselves:
| Financial Literacy Grade | 2013 | 2012 |
|---|---|---|
| A | 10% | 10% |
| B | 35% | 41% |
| C | 35% | 33% |
| D | 11% | 9% |
| F | 4% | 3% |
The report also revealed how confident people are in their knowledge of various financial terms compared to a year ago. As in 2012, Registered Retirement Savings Plans (RRSPs) and Tax Free Savings Accounts (TFSAs) are the types of investments people are most familiar with, although the numbers have decreased slightly:
- Registered Retirement Savings Plan (RRSP) – 77%; down from 79%
- Tax Free Savings Account (TFSA) – 67%; down from 72%
- Guaranteed Investment Certificate (GIC) – 59%; down from 62%
They feel least knowledgeable about:
- Registered Disability Savings Plan (RDSP) – 24%
- Dividend Reinvestment Plan (DRIP) – 24%
- Exchange Traded Funds (ETFs) – 22%
Many may have a false sense of confidence in their level of financial knowledge, the report suggests. As part of the report card, people were quizzed on three questions related to common financial concepts. The report revealed:
- Nearly one-third (31%) of those who give themselves an “A” were not able to answer more than half of the questions correctly.
- Moreover, while respondents say they are most familiar with RRSPs, 66% correctly answered that you only pay taxes on RRSP investments when they are withdrawn – down from 80% in 2012.
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- Fewer than half (48%) understand the benefits of compounded interest, down from 57% last year.
- Younger people have more trouble with these questions, with only 39% of those under 35 passing the test.
Regional and demographic breakdown:
| Category | Overall | Atlantic | Quebec | Ontario | Prairies | Alberta | B.C. |
|---|---|---|---|---|---|---|---|
| Give self “A” or “B” | 45% | 38% | 39% | 50% | 41% | 58% | 43% |
| Knowledge of RRSPs | 77% | 66% | 75% | 80% | 72% | 83% | 77% |
| Knowledge of TFSAs | 67% | 54% | 57% | 72% | 61% | 73% | 73% |
| Knowledge of GICs | 59% | 50% | 48% | 66% | 54% | 68% | 60% |
| Category | Overall | Men | Women | 18-34 | 35-44 | 45-54 | 55-64 | 65+ |
|---|---|---|---|---|---|---|---|---|
| Give self “A” or “B” | 45% | 51% | 41% | 45% | 41% | 43% | 47% | 55% |
| Knowledge of RRSPs | 77% | 79% | 75% | 68% | 75% | 78% | 80% | 89% |
| Knowledge of TFSAs | 67% | 66% | 67% | 68% | 63% | 58% | 66% | 76% |
| Knowledge of GICs | 59% | 62% | 57% | 52% | 55% | 56% | 63% | 77% |