Adele is Professor of Practice in Financial Literacy and Wellbeing for the Centre on Household Assets and Savings Management (CHASM), part of the School of Social Policy.
Over 80 attendees joined the hybrid event from over 40 different institutions including multiple UK charity partners, private sector individuals based in India, Sri Lanka and across Europe as well as representatives from Universities in the UK, Oman, Poland, Ireland, USA and South Africa. The lecture also served as the first CHASM annual lecture.
Introducing the lecture was Professor Nicola Gale, Head of the School of Social Policy. Professor Gale spoke of Professor Adele Atkinson’s return into academia after more than a decade working in developing policy, research, and practice in the field of financial literacy and financial well-being at the national and international level for bodies including the OECD, the G20 and its Global Partnership on Financial Inclusion, and the UN Capital Development Fund.
Professor Atkinson began her inaugural lecture entitled “Financial literacy and financial inclusion: what are they, why do they matter, and what can we do about them?” by defining the key concepts:
- Financial Literacy: A combination of awareness, knowledge, skill, attitude, and behaviour needed to make sound financial decisions and achieve individual financial wellbeing.
- Financial Inclusion: Defined as effective and quality access to financial services provided by formal institutions, at an affordable cost to customers and sustainable for providers.
Professor Atkinson then covered the following key points in an engaging and thought-provoking hour-long session.
Components of Financial Literacy
Financial literacy encompasses a range of skills essential for making sound financial decisions and achieving individual financial wellbeing. This includes the ability to budget and plan, effectively manage income and expenditures, understand, and mitigate financial risks, make informed decisions on significant financial endeavours like purchasing a house or launching a business, and choosing appropriate financial products and services. These components collectively contribute to an individual's capacity to navigate the complexities of personal finance and foster overall financial wellbeing.
Interconnected Nature of Financial Literacy and Financial Inclusion
The lecture underscored the interconnected nature of financial literacy and financial inclusion, emphasising that these concepts should not be viewed in isolation as they jointly contribute to overall financial wellbeing. It was highlighted that individuals might access financial products without possessing financial literacy, potentially resulting in adverse outcomes. Conversely, whilst those who are financially literate can manage their money more effectively, with access to financial services they have the opportunity to leverage their skills to benefit from products and services, leading to positive financial outcomes. This interconnected relationship emphasises the importance of addressing both financial literacy and inclusion to enhance individuals' financial wellbeing.
Importance of Financial Literacy and Inclusion
From a global perspective, the lecture brought attention to quotes from influential leaders, underscoring the pivotal role of financial literacy and inclusion in seizing opportunities, promoting economic growth, and addressing issues related to social mobility. Furthermore, emphasis was placed on the necessity for intentional policies, as financial literacy and financial inclusion were highlighted to be outcomes that do not occur spontaneously. This highlights the importance of deliberate and well-crafted policies to actively cultivate and integrate Financial Literacy and Financial Inclusion into broader societal and economic frameworks.
Impact of Financial Challenges
Professor Atkinson highlighted the profound impact of the current cost-of-living crisis, exerting escalating pressure on individuals' budgets and resulting in missed payments, heightened financial burdens, and the cancellation of insurance policies due to rising costs. Additionally, the discussion addressed the widespread issues of debt and negative budgets, with a noticeable surge in clients seeking assistance from charities such as StepChange and Citizens Advice. Strong links between mental health and financial well-being were emphasised, with stress levels and mental health issues on the rise due to the challenges posed by financial strains. These interconnected challenges underscore the urgent need for comprehensive strategies to address the impact of financial difficulties on individuals and society.
Addressing Financial Literacy and Inclusion
The lecture outlined several strategic approaches to address the challenges of financial literacy and inclusion. First, there was a strong emphasis on starting young, underscoring the importance of developing financial literacy from an early age. This involves defining core competencies, providing training for teachers, and actively involving parents in the process. Another key recommendation involves adult education programs designed to enhance financial literacy and inclusion for diverse groups, utilising a range of delivery methods to cater to different learning preferences. Additionally, the lecture acknowledged the vital role played by socially minded financial service providers, such as credit unions and community development finance institutions, in fostering community-focused initiatives to improve financial well-being. These holistic strategies aim to tackle financial challenges across various age groups and social contexts.
The lecture emphasised that individuals do not have a distinct financial life separated from their overall well-being. It underscored that harm resulting from financially driven exclusion has pervasive effects on one's overall quality of life. Additionally, the lecture advocated for a coordinated approach, proposing that financial literacy and financial inclusion should be integral components of a comprehensive strategy aimed at reducing exclusion and enhancing lives. This approach necessitates strong leadership, evidence-based methodologies, and active community involvement to address the intricate challenges posed by financial difficulties and promote holistic well-being.