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Financial Capability

Financial Capability, poverty and employability are interlinked. Financial capability is a skill which contributes to personal resilience and health, reducing days lost to stress and depression and improving peoples' chances of moving out of poverty.

Financial capability can be defined as:
  • the motivation to efficiently manage finances and effect change;
  • day-to-day management of finances, for example effective budgeting and use of a bank account;
  • planning ahead for retirement, other life transitions and unexpected events, for example by saving;
  • efficient selection of financial products and the ability to understand these products, for example by comparing repayment costs before taking a loan; and,
  • Knowing where, and how, to seek appropriate financial advice.

Increased financial capability can have the following benefits:

  • Can make it easier for some people in poverty to cope on a limited income by minimising expenditure through effective budgeting, shopping around for the best deal on goods and credit; Or by maximising their income by accessing benefits.
  • Improvements in the health, wellbeing and employability of the workforce, increasing household income (benefits maximisation or employment income), reducing demand for crisis-led services such as money advice, homelessness etc, and reduces debt and arrears.
  • Contributes to the increased wellbeing and resilience of the individual. This has a positive effect on their mental and physical health, their employability and the experience of their children.

You can view the event report and video of the 'Building Resilience' national financial capability seminar which took place in June 2011 on the Financial Learning Online Website.