Financial capability

The term financial capability refers to the range of attitudes, behaviours, skills and knowledge that enable a person to secure their own financial wellbeing. Research in the UK has identified four domains, or five aspects, of financial capability:

When the term financial capability was initially conceived, it was discussed in the context of the increasing responsibility for personal financial wellbeing placed on adults in most developed countries. Individuals are increasingly expected to arrange and fund private pension provision, health insurance, university fees and student loans for example. These tasks require individuals to be financially capable in order to make appropriate choices and meet the ongoing financial commitments that they entail.

In more recent times, the global financial crisis has once again turned the spotlight onto financial capability, and particularly on the idea of improving levels of capability in the hope that better informed consumers may help to stabilise the financial markets. Whilst this appears to be an unrealistic aim, we could, perhaps, imagine that capable consumers would be able to weather the cyclical nature of the economy and protect themselves from future financial shocks. Unfortunately empirical research has shown that many people are not financially capable in important domains: they aren’t good at planning ahead to protect themselves financially and that they find it difficult to make appropriate financial products choices. Neither do they keep themselves up-to-date about financial matters.

Finding ways to improve levels of financial capability is a key aim of the xDELIA consortium. It is our intention to explore ways of overcoming the barriers to financial capability using technology enhanced learning. We intend to focus on improving financial behaviours rather than knowledge, since much of the existing provision already seeks to increase knowledge.