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<\/a>Photo: Ora Morison<\/p><\/div>\n
Saul Schwartz, a professor at Carleton University\u2019s School of Public Policy and Administration, says the best way to change people\u2019s behaviour is having some people avoid certain behaviours completely.<\/p>\n
\u201cEverybody has serious self-control issues,\u201d Schwartz says. \u201cWhat you need to essentially do is take the savings decision out of the hands of people who are doing the saving.\u201d<\/p>\n
The reflex to save<\/strong><\/p>\n Schwartz advocates for what he calls \u201cdefault savings programs,\u201d through which the government could deposit tax refunds directly into a person\u2019s savings account, for example, or an employee would automatically be enrolled in a savings plan when he or she took a new job.<\/p>\n \u201cOnce it\u2019s happening automatically you don\u2019t think about it. As soon as you have to think about it yourself, you spend money,\u201d Schwartz says.<\/p>\n His belief is that teaching financial literacy can only go so far. At a certain point, Schwartz argues, even the most financially knowledgeable person will become powerless to their behavioural bias to spend.<\/p>\n The Task Force on Financial Literacy also mentions behavioural bias, saying existing financial literacy programs would do well to acknowledge this reality, especially when it comes to young people whose behaviour is likely to favour spending even more than someone who is close to retirement.\u00a0(Listen below to hear Saul Schwartz speak about the Task Force on Financial Literacy.)<\/p>\n Easy money<\/strong><\/p>\n Norah Foster believes this and other task force recommendations are right on the mark. In particular, she agrees with mandatory financial counselling for every student who receives a government student loan.<\/p>\n \u201cPeople don\u2019t know what they\u2019re getting in to,\u201d she says. \u201cIt just seems like easy money.\u201d<\/p>\n Foster has seen first hand what can happen to students who receive a lump sum of cash from their student loans and give in to the temptation to spend.<\/p>\n \u201cI meet students who can\u2019t go back to school,\u201d Foster says. \u201cThey almost have a degree \u2026 and they get themselves into financial problems. Their student loan has gone in to arrears.\u201d<\/p>\n The task force falls short in other areas where young people are concerned, however, Foster says.<\/p>\n The recommendation that companies provide financial literacy training for new hires grates against her sense that the private sector will not readily participate in educational programs like that.<\/p>\n \u201cI just don\u2019t feel the companies are going to say that\u2019s their responsibility,\u201d Foster says.<\/p>\n Instead, Foster believes in teaching financial literacy in public schools, as it currently is in several provinces. This is the best way to impart financial lessons because it reaches everybody she says. Except, of course, today\u2019s young adults who graduated high school before this curriculum was implemented.<\/p>\n Foster says her clients often tell her they wish they\u2019d learned these lessons in class.<\/p>\n \u201cThey\u2019re asking why didn\u2019t I learn this is school?\u201d Foster says.<\/p>\n ————————————————————————————————-<\/p>\n Saul Schwartz<\/strong>is a professor at the School of Public Policy and Administration at Carleton University.<\/p>\n