The Canadian Centre for Financial Literacy has published a report finding there is substantial, if not yet extensive, evidence that community financial literacy interventions can make an important contribution to the well-being of vulnerable groups, in the context of other factors that shape financial outcomes. While research is still just emerging on the effects of different interventions, what works and why, the existing evidence tells us that financial literacy supports for low-income and vulnerable groups can, if done well:
- Improve savings behaviour
- Reduce self-reported stress
- Enhance self-efficacy
- Help establish good financial knowledge, attitudes, and habits in vulnerable youth
- Lead to better housing outcomes for people moving out of homeless shelters into rental housing, as well as low- and modest-income homeowners
- Help orient newcomers to Canada’s banking system and improve their confidence
Field experience and very limited evidence also suggests that financial literacy interventions may be able to help participants:
- Better navigate key life transitions
- Enhance their financial inclusion
- Improve their access to public benefits
- Manage the effects of windfalls that typically result in clawbacks of income benefits and other critical subsidies and supports they may rely on
Financial literacy is not a panacea and should not be seen as an alternative to effective regulation, adequate financial resources, and other public policies to promote social and economic inclusion and well-being. However, there is an irreducible need for financial literacy for all Canadians, regardless of income or wealth, and a clear need for distinct financial literacy supports for vulnerable Canadians.
While the review has found some promising evidence for a range of impacts, it is clear that further research is required to improve current understanding of the impacts and effective- ness of financial literacy interventions for vulnerable groups.
View Highlights Video from the report launch