Studying the Financial Behaviour of People with Low-Income Using Results from the Canadian Financial Diaries research project

Speakers: Jennifer Frimpong and Wayne Simpson, University of Manitoba and Jerry Buckland, University of Winnipeg, Canada

Measuring financial literacy (or capability) most often relies on universal indicators and often finds that people with lower incomes are less literate. This study argues that universal measurements of financial literacy are often based on assumptions about what skills and knowledge are needed and available and these may not apply to people with low-income. The Canadian Financial Diaries research project completed phase one that involved working with 28 people for one year and gathered quantitative and qualitative data about their finances. Contrary to results from national surveys on financial literacy, we found that these low- and modest middle-income participants were careful with their finances by doing things such as paying of one’s credit card immediately, deliberately focusing on needs, and tracking one’s finances. There were cases of decisions that seemed to harm the participants longer term financial wellbeing but, in many cases, barriers in banking, the labour market, and government support programs prevented a better choice.