What is financial literacy and why is it important?

According to Futurpreneur, a non-profit organization providing financing, mentoring and support tools to aspiring young business owners, financial literacy is the ability to understand how money works: how someone makes, manages and invests it, and also expends it to help others.

So, why is it important? Today, money is used as a tool to get goods and services. Even if we no longer have a physical connection with money, as many people use debit, credit or e-transfers, it is essential to everyday life. Therefore, it is important to understand how it works and how to manage, invest and expand money.

Let us dive into how we interact with money. From a young age we form a relationship with money, this could be through hearing about money, either in a positive or negative context, seeing money, receiving an allowance or something else entirely.

In Victoria LaBillois’ presentation at the Indigenous Women in Business Conference, Introduction to Financial Management and Literacy, she touches on how our relationship with money starts from a young age. How did our parents talk about money? Was there enough money to buy groceries? How often did you get new clothes and were they of the same quality as your friends?

These answers may guide you as to how you think about money today.

There are also historical aspects that play into how Indigenous people think and act around money. Historically, according to LaBillois’ presentation, Indigenous communities lived communally. This means resources and services were shared amongst everyone. It is also imperative that there was an abundance of resources from the land, the sea and nature that provided food, shelter, clothes and more.

The introduction of colonialism warped this way of thinking and interrupted traditional ways of survival.

In this new western economy Indigenous people did not have equal access and still face barriers today.

In the 2018 study Financial Literacy of Indigenous Secondary Students in the Atlantic Provinces by the Atlantic Aboriginal Economic Development Integrated Research Program it was found that there were multiple financial literacy programs and opportunities, but there was a lack of understanding around Indigenous peoples and their participation in the mainstream economy.

It was also acknowledged that the lower financial literacy levels in Indigenous peoples tend to show the history of cultural, social and economic exclusions imposed on Indigenous populations that were created and maintained by system racism. Which is something that is still present today.

The study also pointed out that using financial literacy teaching tools and education was more nuanced for Indigenous communities because western education is rooted in a colonized system of oppression and assimilation. It was also noted that education systems continue not to recognize cultural differences, Indigenous ways of learning, or the historical standpoint of Indigenous peoples in Canada today.