When it comes to finances, it seems like Canadians are all talk and no walk, according to the latest study by Loans Canada.
The study found that while two in three Canadians consider themselves "financially knowledgeable", it appears that they are not making informed decisions about their finances.
Of those who said they are confident, close to half are not even tracking their expenses and spending habits. Furthermore, two-thirds admitted they are not paying their credit bills in full every month.
Almost three in four Canadians who claim to be financially knowledgeable also said they are not saving on a regular basis.
"The purpose of this survey was to learn more about credit-challenged Canadians and the role their financial literacy plays in the financial decisions they make. When tested on their financial behaviour and decision making, their performance was not in line with their claims," said Criz Ravazzano, CTO at Loans Canada.
When it comes to dealing with loans, close to half of all the respondents in the survey are practicing loan stacking to cover for unexpected costs or to make ends meet.
Loan stacking, as defined by the study, means taking on multiple loans from multiple lenders. This practice often results in numerous monthly payments and increases risks of defaults and violation of loan terms.
Additionally, some credit-constrained Canadians do not realise that payday loans are the most expensive form of borrowing. In fact, nearly half of all borrowers have high-interest debt in the form of payday loans.
"Our findings show that many Canadian consumers still have a lot to learn when it comes to their financial health, and we feel that financial education plays a very important role in financial decision making. We will continue to make financial literacy a key component of our content strategy moving forward," Caitlin Wood said, chief editor at Loans Canada.
