Millennial business owners may need a financial reality check

Poll of small business owners uncovers gap between perceived and actual financial literacy

Millennial business owners may need a financial reality check

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.


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