Financial Literacy: a Key Tool to Improve People's..
Financial Literacy: a Key Tool to Improve People's Life Cycle
Start date: Nov 1, 2015,
End date: Aug 31, 2018
Economic financial literacy is a key skill to achieve an active citizenship and to improve financial wellbeing, in a challenging environment. Financially-literate people budget, save, control spending better; handle mortgage, participate in financial markets, moving from basic financial skills to a more complex wealth management know how. The latter is thus vital for low income groups to prevent them from crossing the poverty line and to achieve a better standard of living. Research highlights how:
-Financial illiteracy is widespread in almost all countries, including FinKit’s
-Financial knowledge is highest among the 45 ‐ to 55 year olds
-Gender differences are still significant, due to persistent cultural&societal causes
At the same time, low income households are often overlooked by financial institutions (in terms of access to information, counseling and products): the result is a vicious circle of financial exclusion.
FinKit will focus its action on poor elderly and middle age women.
If, according to the traditional lifecycle model, people borrow when young, save when middle aged and dissave when old, in reality the rate of wealth decumulation is slower. Less financially literate seniors tend to overlook the financial tools available to manage wealth and retirement, and show a distorted confidence in their financial decision making skills.
A specific segment is made by “house rich, cash poor” elderly (home ownership in South EU accounts for ca. 80% of personal wealth) whose assets are mainly tied to housing, and living in “self-inflicted poverty”.
The second subgroup - middle age women- need wealth management skills for a combination of labour -and demography- related reasons (shorter working life, lower average incomes, higher life expectancy than men, primary caregivers for children). Evidence shows how women are a hard-to-reach group, due to work/social obligations, financial attitudes and a still surviving social segregation.
To cater for end users EFL needs, educational initiatives are wanted, addressed to formal and informal trainers/coaches, belonging both to the formal training system and to the no profit sector [TARGET GROUP], who deal with people at risk of financial exclusion. Such practitioners - relying on the strong trust relationship built with these and on the knowledge of their (economic and social) background– will be EFL first level trainers.
FinKit NEED AND OBJECTIVE 1
There is a NEED:
- for a common vision for EFL: trainers/coachers/volunteers, programme developers, policy makers, local development agencies, financial players must gain a shared understanding of the issue, and learn to work in a “whole community approach”.
- for research to better frame beneficiaries’ needs and develop effective programmes.
FinKit will identify the key evaluation criteria for already existing EFL initiatives (including their delivery mechanisms - e.g. language, timing, learning environments) to define the best ways to reach the financial excluded and allow a more constructive use of resources.
FinKit will provide deeper insight of end users’ needs and behaviors by analyzing the influences on financial decision making (e.g. environmental; social; economical; personal) and the strategies that could promote a more sustainable savings behavior among vulnerable consumers.
FinKit NEED AND OBJECTIVE 2
There is a NEED for a continuous development of practitioners, by:
a) understanding their demands and capitalizing on their expertise
b) improving their EFL competencies
c) providing tailored training sets
a) design tools (booklets, videos, interactive games) to convey specific skills to practictioners, increasing their capacity to transfer EFL knowledge
b) test new delivery means
c) promote learned-centred pedagogical tools, aware of social& cultural diversity. From here, the focus on Mediterranean countries and selected end users
FinKit brings together players (from ES, F, I, PT) with different backgrounds, missions and social focus: 2 research centres, 1 no profit foundation, a national training association, a higher education establishment. All have a sound experience in tackling the broad issue of EFL at academic level, as applied research (and pilot projects), and through training/ coaching actions with vulnerable groups. The 2 organizations linked directly with end users with will play a specific role by a) fine-tuning research topics, training priorities and measures’ design, b) offering a qualitative understanding of local beneficiaries and trainers.
FinKit potential medium term impact is justified by partners capacity to sustain EFL (research and training) initiatives beyond the project lifetime and the project boundaries, by sharing core findings with a significant number of local and international stakeholders (e.g. public administrations, foundations, adult education practitioners, local development agencies & no profit associations, academia and financial institutions).
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