Making ends meet was harrowing for many during the pandemic as results from a recently released survey found that 50 per cent of respondents were not satisfied with their financial situation and 27 per cent said they had too much debt to deal with.
The National Financial Literacy Survey Report released by the Central Bank this week found that 29 per cent of people did not have money left over at the end of the month while 34 per cent worried about paying normal living expenses with 29 per cent saying they were just getting by financially.
According to Dominic Stoddard, Financial Services Ombudsman who presented the findings of the survey its purpose was to access the impact of National Financial Literacy Programme (NFLP) interventions, evaluate the current state of financial literacy in the country, inform the strategic direction of the NFLP and make an initial assessment of the public’s experience with financial fraud.
Noting that the NFLP has been in existence from 2007, Stoddard said thus far 143,000 people have been interviewed.
In this survey, the methodology differed because of the constraints with COVID.
Hence, no face-to-face interviews were done and instead comprised a mixed method incorporating online and telephone interviews and included 1,090 adults, 151 students and 160 SMEs.
“We worked in a context of negative growth and high unemployment. We used the organisation for economic cooperation and development (OECD) methodology and we were in the context of a pandemic,” Stoddard further explained.
He said apart from evaluating the current state of financial literacy the survey also gauged the public’s attitude towards digital financial service, made an initial assessment of the public’s experience with financial fraud and helped to inform the strategic direction of the NFLP going forward.
Regarding the use of digital products Stoddard said the survey found that 62 per cent of adult respondents used at least one digital financial service (e.g. online banking, mobile app, digital wallet or payment service such as WiPay, SurePay etc.) while digital adopters were typically under 45 years old, predominantly from the west and central regions, and were holders of a first degree of higher.
Overall, he noted that financial literacy in Trinidad was 69 per cent while Tobago recorded 67 per cent.
On the levels of financial literacy he said 35 per cent of participants had high financial literacy compared to 44 per cent with low financial literacy.
People with lowest financial literacy scores were between 18 and 24 with limited secondary school education.
“The highest level of education was at Form Three and they were generally of the lower socio-economic group,” Stoddard noted.
Those with highest financial literacy scores were over 35, fell into a higher socio-economic group and had a tertiary level education.
Of the components which were measured, including knowledge, behaviours and attitude, Stoddard said the lowest score was obtained for knowledge of financial products and services.
“This tells us that we need to make people more aware,” he said.
Regarding the unbanked this showed no change from previous years.
“We measured the unbanked population and in 2007 we came up with 21 per cent of the population or one in five persons being unbanked. This year we came up with 19 percent.
“So given that the margin of error which is plus or minus three per cent, we could safely say there was no change in the unbanked population,” Stoddard said.
The survey also took into account the Small and Medium Enterprises (SMEs) sector.
According to Stoddard it showed that only 40 per cent of SMEs prepared financial statements annually while 32 per cent agreed that their business objectives were reasonably on target and 37 per cent felt it was not on target.
The survey indicated that 52 per cent of businesses have negative sentiments about the state of the economy in the last five years.
Also, at least four in 10 business people hold positive sentiments about their entities and for their future.
The younger generation was also instrumental in the survey which helped to garner the perspective of young people regarding financial matters.
According to the survey, parents decided how children between 10 to 14 years should spend their money, while older students from 15 to 17 years tend to make money decisions for themselves.
So what do they spend money on?
Seventy per cent of students spend their money on snacks.
The survey also showed that 33 per cent of students made a list of items they wish to purchase.
However, the findings showed that females were not only more likely to do so but they also stick to their list.
On prudent spending, the survey showed that just about six in 10 students in the 15 to 17 age bracket compared prices before buying and doing online price checks.
These elements among others from the survey, Stoddard said were then examined following which several recommendations were made so that T&T can achieve greater financial prudence; key of which remained public education.
Suggestions included a comprehensive overhaul of NFLP content resources to encompass modules on using digital financial products and services as well as detecting and avoiding financial fraud.
Other recommendations included to conduct at least one entrepreneurial workshop per quarter to assist existing and potential small businesses and to develop and disseminate content specifically designed to treat with choosing appropriate credit products and debt coping strategies.
Financial literacy ought to also begin at an early age.
Hence, there are also plans to target parents and other non-traditional stakeholders (e.g. teachers, TTUTA, PTAs) to support the student population with appropriate financial knowledge and even liaise with the Chief Education Officer to work out the longer term objectives of having financial literacy embedded in the curriculum.
General recommendations include implementing a more structured programme of advertising and promotion to increase awareness of the NFLP, develop additional interactive tools (budgeting, investing, risk management) for use by target population segments and work with Government agencies that provide social support to ensure that recipients have access to and make use of the services offered by the NFLP.