ANALYSIS OF FACTORS THAT INFLUENCE FINANCIAL LITERACY OF MILLENNIALS IN CANADA

Varinder Gill, Fuk Chang Li, Charles Matovu
2020 International Journal of Economic Sciences  
Financial literacy has been recognized as a key skill that equips us with knowledge to manage our financial resources effectively, especially in an increasingly complex financial scenario. Despite its significance, studies around the world indicate that much of the world's population still suffers from financial illiteracy and that measures to remedy the problem are urgently needed. This research focuses on millennials that are the biggest component of the labor force in Canada and as of 2012,
more » ... da and as of 2012, households in Canada of the age group under 35 held over 824 billion in assets. Millennials are vulnerable to higher than average levels of disappointment due to their unrealistic financial goals. Despite of their decent earnings, they lack money management skills. The way they behave towards financial literacy may severely affect the economies and societies in which they choose to settle. This study finds out the factors motivating millennials to become financially educated and the best way to spread financial education among motivated people. Moreover, the focus of this research is to find out the sources that millennials get their financial information from. Also, the factors influencing the perception of financial literacy among low-income millennials in comparison to middle income group are studied. Based on our data analysis, we conclude that the overall perception of millennials that they are fairly knowledgeable seems to be a hindrance to their financial literacy. Financially empowered Canadians will reduce the burden on the social safety net and enable them to better plan for their own future. Though there are several programs launched by governments and other organizations in Canada, financial literacy is still a large scale problem. This research proposes future studies on financial literacy among youngsters and millennials so that timely action could be taken to prepare them for their future goals. Source:-Prepared from primary data collected from millennials through qualtrics online survey platform We also found that 68% of the people understand the impact of compound interest on money. It could be due to the fact that this concept is covered in high schools. (Figure 2) Figure 2: General Financial Literacy Source:-Prepared from primary data collected from millennials through qualtrics online survey platform While studying the use of Alternate Financial Services (AFS), we were able to find significant difference between mean values of usage of AFS among low income and high income groups. We concluded that those having an income of less than $50,000 a year on average borrow 0.48 times higher than those earning between 50,000-75,000 a year. Only 20% of the people under study have used AFS so far. It becomes vital to educate them about these complex products especially about the disadvantages of using them. (Figure 3)
doi:10.20472/es.2020.9.1.005 fatcat:coqahqhbr5cjljynuau6kdj5xm