A recent survey highlights gaps in financial knowledge amongst 18–34-year-olds.
(New Westminster, BC – November 29, 2021) One-third of young, adult Canadians have checked their credit score within the last month compared to 25 percent of their older counterparts, according to a survey by Equifax Canada.
With more institutions going digital during the pandemic and an abundance of services providing free credit scores and reports, checking them has become almost as easy – and frequent – as checking email or missed calls on your phone. However, this easy and frequent access doesn’t always translate into financial understanding.
With less experience in using credit, those aged 18-34 were more likely to believe false statements about credit scores and reports, showing a lack of understanding about how and why a credit score affects overall financial health.
Isaiah Chan, Vice President, Programs & Services at the Credit Counselling Society says that while it is encouraging that younger people are interested in obtaining their credit score, it is crucial that they get beyond just ‘the number.’ “Understanding how your score is calculated, what it means for future borrowing, and the factors that cause it to increase or decrease are all issues that need to be considered when reading your credit score.”
According to data from Equifax, credit card spending in 2021 has reached a three-year high; and 17 percent of those aged under 35 said they expected to spend more this holiday season, compared to just six percent of those aged 35 and up.
Increased spending coupled with a lack of financial understanding about credit scores, debt, and borrowing can be a dangerous combination, says Chan. “Budgeting and financial restraint tend to take a backseat during the holidays,” and while it can be easy to get caught up in the whirlwind of the season, he adds that staying on top of your finances during this time of year, can help you avoid debts and stress come 2022. “It may not sound like much fun but try to stay on budget when shopping for gifts, food, drinks, and other holiday expenses. Come January, you’ll be happy you did.”
It might be tempting to use the holidays as an “escape” from your financial woes, but avoidance won’t eliminate the issue. Chan adds, “If you’re feeling overwhelmed, or just want some financial advice, reach out. There are free and low-cost options for financial help, as well as educational resources, and advice from experienced, unbiased financial counsellors and educators that can help you understand how to read your credit report, how to budget with it in mind, and even how to stay on track during the holidays, it’s never too early, or too late to get some help.”