THE FINANCIAL LITERACY GAP WITH INDIGENOUS COMMUNITIES

by yncuniversity | Sep 25, 2023 | Financial Literacy

Understanding the Financial Literacy Gap with Indigenous Communities

Monday September 25, 2023

Financial literacy (understanding concepts such as budgeting, saving, investing, and understanding credit) is an essential skill that empowers individuals to make informed and responsible financial decisions. Unfortunately, not every Canadian has equal access to financial literacy resources and support, particularly among minority and BIPOC (Black, Indigenous, and People of Color) communities. This gap in knowledge can have long-term implications on their financial well-being and overall quality of life. Let’s discuss the financial literacy gap and its impact on these communities, as well as ways to address this issue.

Minority and BIPOC communities in Canada often face unique challenges when it comes to financial literacy. For many individuals in these groups, access to quality financial education is hard to come by, which hinders their ability to navigate financial systems effectively, limiting their opportunities for economic advancement and financial well-being. Moreover, cultural and language barriers can further contribute to the disparity in financial literacy levels.

To bridge this gap, it is crucial to develop tailored financial literacy programs that cater to the specific needs and challenges faced by minority and BIPOC communities. These programs should be culturally sensitive and designed with input from community members themselves. By providing accessible resources and educational initiatives, we can empower individuals within these communities to build a solid foundation of financial knowledge.

Lack of Financial Literacy for Indigenous Communities Throughout Canada

There is an estimated rate of 15% of individuals without bank accounts in First Nations communities, which was derived from 4.2% of low net-worth Aboriginal respondents to the 2009 Canadian Financial Capability Survey. This percentage was double that of non-Indigenous respondents (Prosper, Canada, 2015).

Historically, systemic inequalities, marginalization, and limited access to resources have hindered the economic advancement of Indigenous communities. As a result, many individuals lack the necessary financial skills and knowledge to manage their finances effectively.

Indigenous people have barriers, unique to them, that impede financial wellness which is influenced by: societal and institutional structures, policies and practices; personal financial literacy and behaviour; and cultural beliefs and values. Historically, trading, bartering, and communal distributions of wealth were central to the allocation of food, shelter, clothing, and tools. These systems were disrupted by colonization and assimilation policies and practices, including Canada’s residential school system. Depending on their geographic location, some communities may also have limited or no local access at all to safe and affordable financial services.

How We Can Make Financial Literacy More Accessible?

To bridge this gap and ensure that financial literacy becomes more accessible to all Canadians, we need to take proactive measures. By promoting education and awareness, we can empower individuals to make sound financial choices. Tailored financial literacy programs ensure that individuals from these communities receive relevant and culturally sensitive education, giving them the confidence to make informed and responsible financial decisions.

One approach is to integrate financial literacy into school curriculums from an early age. By teaching children the importance of money management, budgeting, and saving, we can equip them with essential skills for their future. Providing financial literacy workshops and resources in schools and community centers can also contribute to raising awareness.

Additionally, utilizing digital platforms and technology can play a crucial role in making financial literacy more accessible. Creating user-friendly apps and online tools that simplify complex financial concepts can help individuals better understand and manage their finances. Offering online courses or webinars can also enable people to learn at their own pace, regardless of their geographical location.

Collaboration with Indigenous communities, financial institutions and other organizations is vital in developing targeted financial literacy. These initiatives should incorporate traditional teachings and values while equipping individuals with the tools they need to succeed in modern financial systems.

Understanding retirement planning is also critical to individuals’ financial wellness later in their lives, particularly if they only have limited financial resources. The financial and legal implications of living on- or off-reserve can be very complicated for First Nations peoples, while many people in general are challenged by the increasing complexity of financial products and services, as well as pension and retirement-related government tax and benefit programs. Financial education can help individuals understand how government benefits, employer-sponsored pensions, employment income, investments, and personal savings all fit into one’s overall retirement income.

Building community capacity to deliver tailored financial information, education, and one-on-one support systems is critical to promoting financial wellness within Indigenous communities. This is the only way to ensure that key aspects of cultures and worldviews (such as non-monetary economies, values, customs, and languages) are incorporated to make financial literacy relevant and engaging for these diverse communities. Indigenous Elders and role models can also help to support efforts to enhance community financial information and decision-making, including for Indigenous youth. Developing contextualized curricula that place Indigenous experiences, cultures and values at the core of financial education is essential to any effort aimed at addressing financial wellness barriers faced by these communities.

We encourage you to share some of these financial literacy tools and resources currently available to support financial literacy education for First Nations, Inuit, and Métis peoples:

• AFOA Canada’s Aboriginal Financial Literacy Needs Assessment and Framework – a comprehensive in-depth overview of Aboriginal financial literacy needs and a guide for addressing these. Visit https://afoa.ca/education/financial-wellness/
• The British Columbia Association of Aboriginal Friendship Centres’ Aboriginal Financial Literacy: Journey to Empowerment is a 250-page facilitator’s guide and curriculum exploring financial literacy topics through an Aboriginal lens. Visit https://bcaafc.com/
• The Healthy Aboriginal Network’s Game Plan – comic book for Aboriginal youth featuring a teenager named Jake who struggled with financial wellbeing until he was taught a lesson or two in financial literacy. Visit https://istorystudio.com/wp-content/uploads/2014/04/Game-Plan.pdf

By addressing the financial literacy gap and making financial education more understandable, engaging, and accessible, we can empower individuals and contribute to a financially literate society. Let’s strive towards equipping all Canadians with the knowledge and tools they need to make informed financial decisions, ensuring a brighter and more secure future for everyone. We can help break the cycle of economic disadvantage and promote financial well-being by empowering minority and BIPOC communities through access to quality financial literacy that relates to their individual situations.

Additional financial literacy tools, resources, and events can be found on the Canadian Financial Literacy Database.

Our goal is to ensure every one of our members is equipped with the knowledge and confidence to make responsible financial decisions. Our financial advisors at YNCU are always available to provide educational advice and are happy to assist wherever they can. For all your general financial inquiries and how you can plan out your financial goals, come in and talk with an advisor at your nearest YNCU branch.

Bank of Canada Rate Hikes Explained

by yncuniversity | Aug 31, 2023 | Financial Literacy

Bank of Canada Rate Hikes Explained

How Will Rising Rates Impact Your Finances?

Thursday, August 31, 2023

In July of this year, The Bank of Canada increased its target for the overnight rate to 5%, with the Bank Rate at 5¼% and the deposit rate at 5%. This comes only weeks after its early June decision to raise it to 4.75%. Today, we’ll be talking about this recent rate hike and how it might affect your finances. So, let’s dive right in!

The Bank of Canada often raises interest rates to manage the economy and maintain stability. These rate hikes are implemented when the central bank believes that the economy is growing at a fast pace, which could lead to inflation. By raising interest rates, they aim to slow down borrowing and spending, encouraging individuals and businesses to save and invest instead. This helps to prevent prices from rising too quickly and ensures the economy stays on track. This makes borrowing more expensive, reducing consumer spending and cooling down the economy. Through this measure, the central bank can effectively manage inflationary pressures and ensure long-term economic growth. Remember, the Bank of Canada’s actions are always in the best interest of maintaining a healthy and stable economy for all Canadians.

If you have a variable-rate mortgage or any other debt tied to the prime rate, you can expect to see an increase in your payments. Since borrowing costs rise, your lender will adjust your rate accordingly. On the bright side, savers may rejoice! Higher interest rates mean that you’ll earn more on your savings accounts and fixed-term investments. This could be a great opportunity to grow your nest egg or achieve your financial goals faster.

Here are some ways to maintain financial stability despite the impact of rising policy interest rates and inflation on your finances:

• If you find that the price of food and gas has increased in the last year, it could be a good time to re-evaluate your priorities and update your budget.
• If you’re planning to buy your first home, you might have to rethink your budget for the first few years because rising mortgage rates may change how much you can borrow. Click HERE to see the mortgage options YNCU offers.
• If your mortgage rate expires in less than 6 months, an early renewal may be advantageous to secure a lower rate before the next increase, should the rates increase more, without penalty. For a loan coming with a longer term, you will need to take into consideration the penalty fees.
• If you have a variable-rate mortgage, your monthly mortgage payments may increase. Fixed-rate loans will only be affected at the time of your renewal.
• If you have savings at your disposal, this could be an opportunity. When stocks are down, it’s a good time to buy. In addition, some investments, such as guaranteed investment certificates (GICs), see their interest rates rise during a period of rising rates. GICs offer a guaranteed rate of return, so are a safe investment choice, even when the market feels unpredictable. Click HERE to check out YNCU’s current lending and investing rates.
• If you’re concerned about your investments, discuss them with your financial advisor. Above all, don’t make hasty financial decisions. In a long-term strategy, it’s normal for the value of certain investments to fluctuate. Remember that just because rates are rising, or markets are volatile for a period, doesn’t mean your long-term financial plan has to change.
• If you have debts, such as a line of credit, a personal loan, or a credit card balance to repay, prioritize paying off the ones with the highest interest rates first.
• If you want to increase your cash flow or build an emergency fund, you may want to postpone certain projects, like a big trip or renovations.

Of course, it’s always wise to review your personal financial situation with a professional advisor who can provide tailored advice based on your specific needs. They can help you determine whether any adjustments need to be made to your budget or investments. While rate hikes might bring some challenges, they also offer opportunities. By staying informed and taking proactive steps towards managing your finances, you can navigate these changes with confidence.

For all your general financial inquiries and how you can plan out your financial goals, come and talk with an advisor at your YNCU branch!

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