Poll of small business owners uncovers gap between perceived and actual financial literacy
While millennial small business owners in Canada may want themselves to be better prepared for financial instability this year, a new survey suggests that they may be sorely underequipped to make it happen.
In a poll of 800 Canadian small business owners, Xero found that around three fifths (62%) of millennials (18- to 34-year-olds) surveyed considered themselves to be financially literate. But when presented with a series of true or false questions to test their financial literacy, that group got an average score of ‘D’ (66%).
That was the worst letter grade among respondents across generations, as Generation X business owners (ages 35 to 54 years old) got a ‘C’ or 76% on average, while Baby Boomers (ages 55 and older) earned a ‘B-‘ or 82%. With respect to self-ratings of financial literacy, Generation X and Baby Boomers gave favourable personal ratings of 68% and 77%, respectively.
Around one fourth of millennials surveyed (24%) were not aware that they needed to declare the total amount of pandemic aid they received in their tax returns. In contrast, just 14% of Gen Xers and 13% of Baby Boomers, respectively, got the question wrong.
“The survey data shows a gap between perceived and actual financial literacy among millennial business owners, which means they may be leaving money on the table,” Faye Pang, Canada Country Manager at Xero, said in a statement.
True to form, millennials were found to be more likely to trust social media platforms for their business financials (40%) than Generation X (28%) and Baby Boomer respondents (17%). When asked to rate how much they trust different sources of financial information, 84% of millennials responded that they trust themselves moderately to completely; they showed nearly the same level of trust in business advisors (83%) followed by their friends (79%).
The survey also examined how the rollout of COVID-19 vaccines impacted respondents’ outlook on the future of their business.
A third of millennials (33%) felt pessimistic before, and have not changed their sentiments. In contrast, 34% of Generation X and 46% of Baby Boomer participants said that they were optimistic before and still feel optimistic now.
