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If you’re the kind of person that becomes mindlessly outraged by inflammatory statements, this probably isn’t the article for you.
As Robert Frost said: “Education is the ability to listen to almost anything without losing your temper or your self-confidence.” I have a great deal of faith that my readers are of a particularly educated and self-confident persuasion.
I recently caused a stir (as I’ve been known to do from time to time). It was on another blog that I read daily and enjoy called CanajunFinances. The blog’s author BigCajunMan shared a rant about Canadians’ increasing use of high-interest tax refund anticipation loans. Rightfully so.
In response, I asserted that Canadians are stupid about money. Specifically I said:
I think you’re dancing around the primary reason that this scheme thrives in our economy: the average Canadian is stupid about money. I could point out other evidence such as the growth of payday loans, the prices that people are willing to pay for crap shacks, and the debt:income ratio (which is now higher than in America).
Let me be clear: I don’t think every last Canadian is stupid about money. In fact, as somebody who takes time to read personal finance blogs, you’re probably much smarter about money than the norm. Further, when I use the word “stupid”, I mean its actual definition.
- Slow to learn or understand; obtuse.
- Tending to make poor decisions or careless mistakes.
- Marked by a lack of intelligence or care; foolish or careless: a stupid mistake.
- Dazed, stunned, or stupefied.
- Pointless; worthless: a stupid job.
When I say “money-stupid” I mean #1 - #4 with an emphasis on 2. As a nation we’ve been very slow to learn and understand money. I think “obtuse” is a fair characterization of how aloof/cavalier/negligent our approach to debt is. Clearly Canadians have, on the whole, tended to make poor decisions and careless mistakes. We’ve definitely been foolish and careless. In fact, you might say that we’ve been dazed/stunned/stupefied. Actually, if #5 means that Canadians are money-impotent, then it’s probably accurate, too.
As you can see, the actual definition is pretty far-off from the straw man definition assigned to my words that garnered mindlessly offended reactions.
Also, I guarantee that if I’d asserted “Americans are money-stupid!” that nobody would have taken offence; I probably would have gotten a few pats on the back. Canada’s biggest resource besides oil is its hubris. Does pride come before the fall or after? I totally forget…
The next day, BCM wrote an impassioned piece saying that Canadians are not financially stupid. The title says that the article “asks” whether Canadians are financially stupid, but the article treats the answer as a foregone conclusion. My assessment is deemed similar to an opinion from your kooky Uncle: crass and inaccurate.
Crass? Yes. It’s kind of my thing.
On this piece I clarified my thoughts with the following comment:
The “hold Cdns by the hand and whisper in their ear that everything will be OK” method has failed.
The Wealthy Barber was a great book. Not perfect, but still great. If the two+ million Canadians who read it had followed its advice, we wouldn’t see the proliferation of financial stupidity we’ve had in Canada. But proliferation of stupidity is exactly what we’ve gotten. Housing bubble, 150%+ debt:income, payday loans, consumer spending moving from 65% to 75% of GDP, parents not maximizing their RRSPs so they can contribute to an RESP. A large portion of people are living paycheque to paycheque. Unless you’ve got a gold-plated DB pension, statistical probability is that you are completely ill-prepared for retirement. When the housing market stops snorting coke, we’re in for a world of hurt. Most baby boomers have a massive part of their portfolio in their house. Who are they going to sell it to? The destitute, jobless Gen Y? Don’t worry, there’s a reverse mortgage scam with your name on it!
The Chinese savings rate is 35%, Canada’s is negative. The American housing market has normalized and the economy is deleveraging. If other countries are stupid with money, Canada is a special brand of stupid. And let’s not compare ourselves to the Eurozone; they’re socialist basket cases – but if you want a crystal ball on what we’d look like if we didn’t have oil…
Time for Gail Vaz-Oxlade style lectures with stern warnings and sailor-speak. If you’re in debt, it’s your own fault. It’s what people need to hear. The Baby Boomers have had everything catered to their needs throughout their entire lives so I can understand why they might need some no-tear shampoo when they hear the truth. It’s time to get real about money.
In his analysis, BigCajunMan offers these adjectives as more accurate depictions of Canadian money-stupidity:
- mad cap/whimsical
Really? I think these adjectives are far less accurate than my choice of “stupid”. In fact, his adjectives are cop-outs.
The idea of naivety simply removes responsibility from the equation. “Oh, nobody *told* me it was foolish to take money from my RRSP for a trip to Fiji.” Come on, grow a spine and take ownership of it.
A lack of education is a weasel-y depiction that, again, avoids assigning responsibility. Being uneducated about money could be a cause of our money-stupidity but, in itself, it’s a weak argument. My grandfather has probably received less formal or family education about money out of anybody I know. Despite this, he’s one of the most money-smart people I know.
There are lots of resources out there that Canadians could use to educate themselves about money. The average Canadian has lacked the common sense to either use those resources or to apply them. I’m not sure which; BCM seems to be very confident that it’s the former. The outcome, either way, is that Canadians are money-stupid (the proof of this outcome is in the proverbial pudding; see my quoted comments for a small sample of said proof).
As a result, Canadians are either:
1) Uneducated about money and therefore stupid about money; or
2) Educated about money and therefore very stupid about money because they’re wilfully blind as to its proper management.
Uneducated? Maybe; but BCM is asserting an unproven hypothesis. Stupid? Definitely.
Side note: there’s something to be said for the improvement of personal finance education. I’d be happy to help develop some curriculum, but I doubt the Big Banks and CREA would be happy about what I developed…
We’ve got banks, payday loan stores, credit card companies, car salesmen, Realtors, retailers, etc. yelling at us to do stupid things all day. That’s still no reason to externalize responsibility. If your Realtor told you to jump off a bridge, would you? How about if your Realtor told you to buy a condo in Toronto?
If we can’t admit that we’re stupid about money, we haven’t even taken the first step toward recovery. We need to take responsibility.
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Canada has a problem. We have become stupid about money. This was not, overall, a problem for our elders. This stupidity seems to have risen to fashionable heights lockstep with the Baby Boomers, and it hasn’t subsided.
Note there’s a theme. All of this sneaky avoidance of the adjective “stupid” is very status quo. It’s typical of the approach to personal finance that has enabled Canadians’ self-destruction. Perhaps some people would rather dance around the truth bonfire, warmed by the flames of Canada’s demise. It probably sells more books and gets more FeedBurner readers. Instead of having an unconstructive debate about the semantics of terminology, isn’t it time we acknowledged the problem and collectively did something about it?
In short: Canada is a land of very smart people who are very stupid about money.
So, let’s have the real discussion on this blog since everybody else is too scared: is Canada a money-smart or money-stupid nation? You can assert that the truth is somewhere in between, but I’ve defined the end points of the continuum and have no interest in re-assessing them.