Financial Literacy and What Professional Accounting Has to Do with It

As I write this, the month is November. It is that time when men grow facial hair for cancer awareness. It’s that quiet lull between Halloween fun and Christmas mania. Also, so well-timed for holiday shopping, it’s Financial Literacy Month! You meant to put it in your calendar. These things happen.

On the outside chance that someone is caught by surprise, we should honour the commemoration. Let’s take the time for a few words about how it came to be, and why it matters to our sound financial health. Our financial doctors, the professional accountants, deserve a mention. They put a lot of work into this.

In the 1990s, the world’s politicians grew to understand how people were making some really terrible decisions with their money. It wasn’t just a question of suffering some personal setbacks with their standard of living. Rising debt and financial unpreparedness bruised the economy on a global scale. Canada’s own government saw it, and initiated some reviews and public consultations.

Protecting the Public: Canada’s Financial Consumer Agency

In time, the federal government would create the Financial Consumer Agency of Canada (FCAC). Their job is to oversee the country’s financial services, and protect the public from anything…untoward. They are also in charge of promoting financial literacy, which they describe as “critical to the prosperity and financial wellbeing of Canadians.” In 2012, thanks to the FCAC and the Financial Literacy Action Group, the Parliament of Canada officially recognized November as our Financial Literacy Month.

So. We don’t want to make bad money decisions – but how do we make good decisions? What do we mean, all in all, by “financial literacy”?

The Government of Canada’s web page is very informative. (There’s a link further on.) They love their bullet points:

Financial literacy is having the knowledge, skills and confidence to make responsible financial decisions.

  • Knowledge refers to an understanding of personal and broader financial matters;
  • Skills refer to the ability to apply that financial knowledge in everyday life;
  • Confidence means having the self-assurance to make important decisions; and
  • Responsible financial decisions refers to the ability of individuals to use the knowledge, skills and confidence they have gained to make choices appropriate to their own circumstances.

Financially literate citizens will make better choices

The site goes on to outline some benefits of the virtues above. Put simply, good and literate citizens will make better choices when choosing what to buy with their money. They will know more about the banks and government institutions created for our benefit, and how to actually use them beneficially. (Setting up an RRSP or RESP, for example, are good ideas.) Typically, there are things we want in life: a home, maybe and, eventually, a good retirement. It’s just not that easy! But with a bit of education we can plan for them.

And of course, everyone is an expert. Everyone has advice. With a ground level understanding of the financial landscape, a person can sniff out good advice from the bad.

Speaking of good advice, enter the professional accountant. While most of us think of them only at tax time, accountants are experts at far more than that. They can advise on how to start up a business and supply long-term planning and projections. If you’re looking to buy or sell a business, they can help with valuation, or the transaction itself. For individuals like you and me – in addition to income tax – they help with financing or audits. If you’re looking at receivership or bankruptcy, they can act as trustee. The website of Chartered Professional Accountants Canada (CPA Canada) has an exhaustive list of their many services.

CPAs are highly trained and respected professionals with a deep insight into the financial landscape. They adhere to a set of enforced professional standards. Their practices encourage transparency in the marketplace, and accountability. We know all too well how vital those are. On behalf of interested parties, they are the go-between with the federal government, and help policy makers make informed decisions.

Most importantly, CPA Canada is mandated to promote financial literacy. Their educational program is award winning and they sponsor special events for the cause. They will meet with adults or students, new Canadians, businesses or entrepreneurs. There are, apparently, over 11,000 professional accountants across Canada who are ready to sit down with you and help you engage with your financial environment.

#CountMeInCA

A media release, dated June 9th 2015, tells how Jane Rooney and then federal Minister of State (Finance) Kevin Sorenson unveiled the National Strategy for Financial Literacy – Count Me In, Canada. See it at www.fcac.gc.ca/CountMeInCA. It’s a rich source of information that should interest you, covering everything from personal banking, to paying for school, to home ownership.

It’s always been good sport in popular culture to make light of penny pinching and the starchy, bespectacled profession of accounting. But accountants are more than technicians. They help keep business on the level and they help us thrive to our financial potential. It’s a jungle of paperwork out there. A little financial literacy can make a huge difference to our quality of life, both short term and long into the future.

Author Glen Peters is a writer and editor living in Ottawa. He has worked in web development, project management and graphic design. Visit his website at www.glenpeters.press. Connect with him on Twitter @glenHimself_.

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