Oct 20, 2026
Canadians like to believe they’re smart with their money. But a new international test of everyday financial knowledge suggests a little humility is in order: Canada placed 22nd out of 27 countries, behind the U.K., Australia and most of Europe.
A middling score might not sound like a big deal. But small blind spots usually pop up right where they hurt your wallet most — — like leaving $10,000 in cash inside a TFSA, where it misses out on real growth.
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The good news? The concepts that confuse people take only an afternoon to learn, but the payoff can last for decades.
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How did Canada score on the global money test?
The ranking comes from a Global Money IQ study by Remitly, a U.S.-based, publicly traded international money transfer company. Participants in 27 countries completed an eight-question test covering interest, compounding, inflation, investing basics, crypto and currency exchange.
Canadians answered 75.5% of the questions correctly — just behind Ireland (75.6%) and ahead of Italy (75%) and the U.S. (72%). The Czech Republic came out on top at 90.9%.
Remitly didn’t break down Canada’s results by topic, but the global pattern is telling. Most participants tripped up on inflation and currency conversion questions. And 70.5% of all respondents said school didn’t prepare them to manage money as adults.
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Why is holding cash in a TFSA a costly misunderstanding?
A TFSA is easily one of the most flexible financial tools available to Canadians. According to the Canada Revenue Agency (CRA), the 2026 annual limit is $7,000, and someone who has been eligible since 2009 and has never contributed has $109,000 in available room. Any investment growth inside the account stays tax-free — even when cashed out.
Yet many Canadians still view it as just a basic bank account. A TD survey conducted by Léger found 39% of TFSA holders aren’t investing the money inside, climbing to 41% among Gen Z and millennials.
There’s a second risk, too. The CRA taxes over-contributions at 1% per month for as long as the excess funds stay in the account. That’s an easy trap for anyone who uses it like a chequing account and replaces withdrawals too soon.
How does compound interest actually work?
Simple interest pays you only on your original deposit. Compound interest also pays you on the interest you’ve already earned, so growth builds on itself.
Picture $10,000 earning 5% a year for 25 years. With simple interest, a person would end up with $22,500. Compounded annually, the same deposit grows to roughly $33,864. Same money, same rate, but about $11,364 more.
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The interest rate matters just as much. Over the same 25 years, $10,000 grows to about $12,824 at 1%, about $33,864 at 5% and about $54,274 at 7%.
A handy shortcut is the rule of 72: divide 72 by an annual return to estimate how many years it takes the money to double. At 6%, that’s about 12 years.
Keep in mind, these numbers are just examples, not guarantees. Investments like stocks and ETFs fluctuate, which means your balance can lose value in a bad year.
Should every TFSA dollar be invested?
Not necessarily. For short-term goals or an emergency fund, holding a high-interest savings account or a GIC within a TFSA is a safe, practical choice. It still earns tax-free interest, and the principal is protected.
For goals five or more years away, holding a diversified portfolio gives compound growth the time and space it needs to to build serious momentum. That’s why younger Canadians, with the most years ahead of them, lose the most by leaving money idle.
Paying off high-interest credit cards is usually the best move — it delivers a guaranteed return that beats virtually any investment.
What to do now
- Check your available room in your CRA My Account before contributing
- Log in to your TFSA and see what it actually holds: cash, GICs, funds or stocks
- Match each pot of money to its timeline
- Run your own numbers with the Ontario Securities Commission (OSC) compound interest calculator at GetSmarterAboutMoney.ca
- Feeling overwhelmed by investing? A robo-advisor or fee-only financial planner is a low-cost place to start
- When travelling, pay in the local currency rather than Canadian dollars at the card machine
A 22nd-place finish isn’t a crisis, but it is a nudge. Start with the account you already have. Cash simply parked in a TFSA limits the account’s potential — and every year it sits idle is a year of compounding you can’t get back.
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Amy Tokic is an SEO content editor for Money.ca. She holds a B.A. in Communications from the University of Windsor. Amy is an award-winning author and has been writing professionally for 15 years, publishing articles in the lifestyle and health sectors.
