Financial education

Overview

The five Saving Gateway pilots do not stand alone but, in all but one case, are run alongside a Community Finance and Learning Initiative (CFLI). One of the objectives of the CFLI is to promote financial literacy through the provision of financial education. The National Foundation of Educational Research describes financial literacy as the ‘ability to make informed judgements and to take effective decisions regarding the use and management of money’.

The delivery of financial education can be said to comprise three key themes: building skills, increasing knowledge and developing understanding and within each of these a client’s confidence should also be developed.

Building skills

Literacy and numeracy are fundamental skills in managing money and understanding the plethora of financial products available by which to do so. Research commissioned by the Basic Skills Agency (BSA) shows that there is a link between people who have low levels of literacy and numeracy and financial difficulties. Almost one in four people (23 per cent of population) do not have the basic skills expected of an 11-year-old. Moreover, research shows that whilst people with poor basic skills do hold financial products, they are less likely to do so.Consequently, the BSA has developed useful resources for delivering financial education to people with basic skills needs and worked with four financial institutions to train front-line workers in helping customers with basic skills needs.

Increasing knowledge

Raising awareness and increasing knowledge of financial products is key in helping people make informed decisions. Financial institutions tend not to market very deprived areas, where residents are more likely to already be financially excluded. As such, residents of these areas are even less likely to become aware of suitable products as they come onto the market. In terms of promoting financial inclusion, much of the work is simply in providing easily understood information in a safe and engaging environment. To this end the Financial Services Authority has produced a detailed consumer website, various free leaflets and a financial planning CD-Rom and these are publicly available through CABs, libraries, post offices and the like. Financial providers and other trusted local community organisations also make excellent vessels for disseminating such information.

Developing understanding

Whilst increasing knowledge is mostly about the provision of information, developing understanding is about giving an individual a strategy for dealing with this information, which might include skills for budgeting, planning, understanding the types of products available and shopping around to find the best deal. There is no definitive way for delivering this type of training but it is generally agreed that, for the client, there has to be ‘something in it for me’. Debt advice, basic skills courses and initiatives like the Saving Gateway can be useful ‘carrots’ for engaging people in financial education and resources like the Adult Financial Capability Framework give a sound structure from which to plan the training.

Building confidence

All aspects of training should build an individual’s confidence. The skills and confidence necessary for filling out forms, asking questions, getting further clarification and making complaints in an effective manner are all too often taken for granted. In all aspects of training there needs to be constant affirmation of the individual, the individual’s rights and significance as a citizen in our society (and of their consequent responsibilities towards others). An individual has a right to ask questions and receive answers that make sense to them from a person who is able to see beyond their own needs and react in a positive way.

If you wish to discuss any Financial Inclusion / Exclusion issues with our support team please telephone freephone 0800 074 6918.

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Financial Inclusion Menu

• Aims of financial inclusion
• How the Government is supporting financial inclusion
• Promoting financial Inclusion
• Financial Inclusion Taskforce
• The reality of financial exclusion
• The implications of being financially excluded
• Toynbee Hall and SAFE: Services Against Financial Exclusion
• Asset-building and the Saving Gateway
• Financial education
• Basic bank accounts
• Financial Inclusion fund for England & Wales
• Conclusion