This document discusses strategies and programs for developing financial literacy at a national level. It begins by defining financial literacy and explaining why a national strategy is important for coordination and focus. It then provides tips for developing a national strategy, including engaging partners, prioritizing initiatives, and building in monitoring and evaluation. Potential partners that could contribute to financial literacy work are discussed. Lessons from behavioral economics and effective social marketing programs are outlined. The document concludes by emphasizing the importance of evaluating financial literacy programs and conducting national surveys to measure impact over time.

1. INTERNATIONAL EXPERIENCE:
FINANCIAL LITERACY STRATEGIES
AND PROGRAMMES
Moscow
4 April 2011
Shaun Mundy
shaunmundy@hotmail.com
International Consultant (Former Head of Financial
Capability Department, Financial Services Authority, UK)

2. Structure of presentation
1. What is meant by being financially literate?
2. Why develop a national financial literacy
strategy?
3. Tips for developing a national strategy
4. Potential partners – who are they and how can
they contribute?
5. Lessons from behavioural economics and from
social marketing programmes
6. Evaluating financial literacy programmes and
national financial literacy surveys

3. 1. What is meant by being
financially literate?

4. What is meant by being financially
literate?
• Having the knowledge, understanding, skills, motivation
and confidence to make financial decisions which are
appropriate to your personal circumstances.
• Ultimately it is about how people behave.
• The UK’s Financial Services Authority distinguished five
components of financial capability:
– making ends meet
– keeping track of your finances
– planning ahead
– choosing financial products, and
– staying informed about financial matters.

5. Depends to some extent on
personal circumstances
• What it means to be financially literate
depends to some extent on a person's
financial circumstances. For example:
– someone with little money needs to know
accurately how much s/he has available,
because consequences of running out could be
severe. But may not need to know about
investing.
– a wealthy person only needs to know in general
terms how much money s/he has available –
but may well need to know about investing.

6. Why is it important for people to be
financially literate?
 People who lack financial literacy are less likely to use
formal financial products – ie they are more likely to be
financially excluded
 Many people are not saving enough – or at all
 Consequences of not being insured, or being under-
insured, can be devastating
 Increasing range and complexity of products – which
give rise to risks which people may not understand
 There have been a number of fraudulent “get rich
quick” investment schemes – people who lack financial
literacy are more likely to be cheated out of their
money

7. 2. Why develop a national
financial literacy strategy?

8. Why develop a national strategy?
 A variety of initiatives/channels/messages are
needed in order to reach and influence a
population. People learn in different ways – and
messages often needed to be repeated to have
effect
 A national strategy helps with: engaging a
broad range of stakeholders; providing focus,
drive and coordination; and setting priorities
 Reduces risk of both unplanned gaps and
unnecessary overlaps

9. 3. Tips for developing a
national strategy

10. Key components of a national strategy –
based on international good practices
 Clear priorities are set – with these priorities taking account of impact,
reach, sustainability and scalability
 Is based on partnership working
 Uses a variety of approaches and channels
 Financial education is provided to schoolchildren, beginning at an
early age
 Starts with the basics – potentially builds on that for those who need
to have more sophisticated knowledge and skills
 Communications are relevant and clear - and lively and engaging
 Monitoring and evaluation built in from outset
 Reaches out to people – doesn't wait for them to come to you

11. Developing a national strategy
 Key stakeholders should be actively engaged – eg through
being consulted on, and helping to steer, development of
strategy
 Prioritise – don't try to do too much too soon. If resources
spread too thinly, little gets done – resources are wasted
and disillusionment sets in
 Priorities should take account of opportunities as well as
areas of greatest need (eg: in some countries, financial
education is provided in workplaces – not because those in
work have greater needs than those who are not in work,
but because workplace financial education can potentially
reach large numbers of people)
 Priorities should take account of impact, reach,
sustainability and scalability

12. Developing a national strategy
(continued)
 Project planning – and robust project management –
needed
 Strategy should be monitored and regularly reviewed,
and adjusted where appropriate
Developing a national strategy is a means to an end –
not an end in itself. Important not to devote so much
time and effort to the development of a strategy that
there is no capacity to develop financial literacy
initiatives on the ground. On the other hand, important
not to rush ahead with initiatives – which may turn out
not to be the best priorities – while a strategy is being
developed

13. Countries with, or developing,
national strategies include:
Australia
Brazil
UK's initial priorities:
Canada  Wide-ranging; but coherent and
Eastern Caribbean Currency Union realistic
Hungary Schools
Ireland
Young adults
Kenya
Malaysia Employees in workplaces
New Zealand Community groups
Singapore
New mothers
South Africa
Tanzania Website – and securing links
from other websites
Trinidad and Tobago
Uganda Personalised advice (non-
UK product-specific)
USA

14. Leadership - and championing -
needed
 If everyone is responsible, no-one is responsible
 Leadership particularly important in field of financial
literacy because – ideally – broad range of partners
will be involved
 In some countries (eg UK, US, Kenya and Philippines),
the leader of the national strategy is supported by a
steering group of senior stakeholders
 Senior level champion can be very useful, eg in
bringing in additional partners and in securing media
coverage

15. Who is leading national financial
literacy work in other countries?
Leaders include:
 central bank (eg Bank Negara Malaysia, Central
Bank of Trinidad and Tobago, Central Bank of
Azerbaijan, Eastern Caribbean Central Bank)‫‏‬
 Government/Government agency (eg US
Treasury, New Zealand Retirement
Commission)‫‏‬
 financial services regulator (eg Australian
Savings and Investments Commission, South
Africa Financial Services Board)‫‏‬

16. 4. Potential partners – who
are they and how can they
contribute?

17. Need to work in partnership
 No single organisation can improve financial
literacy on its own. There are many
organisations with an interest in improving
people's financial literacy who can potentially
contribute
 Improving financial literacy is challenging! It
requires long-term behavioural change – a
single programme is unlikely to have much
impact on its own
 Need to reach out to people, in ways with which
they will engage, through a variety of channels
and using many different approaches

18. Improving financial capability is a
win-win for:
 Consumers – helps people make their money go further; protect themselves
against unexpected events; avoid unnecessary risks, being over-charged or
becoming over-indebted; and avoid falling victim to financial frauds. Less
likely to be financially excluded
 Financial services industry – consumers who are informed and engaged are
more likely to buy appropriate financial products and services (increases
business volumes; reduces marketing costs; fewer complaints)‫‏‬
 Central Bank and other financial services regulators – less need to deal with
results of poor money management skills among consumers
 Government – boosts the economy and economic welfare
 Employers – employees with money worries may be less productive
 Educationalists – being able to manage your finances well is an essential life
skill
All of the above are potential contributors to financial literacy work

19. How can partners contribute?
 Incorporating financial literacy initiatives into their other
activities
 Developing materials
 Distribution – eg of booklets
 Expertise and experience – eg in how best to reach
particular groups
 Providing trainers
 Undertaking projects
 Securing further partners and support
 Providing funding

20. Potential partners – some UK
examples
A wide range of organisations have an interest in
improving people's financial capability – though this
interest may need to be pointed out to them! These
include:
 Financial services regulators
 Government Departments
 Financial services firms and their trade associations
 Employers and trades unions
 Schools education bodies

21. Potential partners – some UK
examples (continued)‫‏‬
 Universities/colleges – helping young people manage
their own money (money problems one of main
reasons that students fail to complete courses)
 Support groups (eg for disadvantaged young people,
single parents, elderly, those with mental health
problems, ex-offenders) – money problems behind
many of problems their clients face
 Midwives – they distribute (free of charge) to expectant
mothers the Parent's Guide to Money. (They are
willing to do so because expectant mothers with
money worries are less likely to be able to focus on
midwives' messages regarding health care.)

22. Other potential partners
 Foundations and trusts, including those
associated with financial services firms
 Donors and development agencies
 Micro-finance institutions
 Rural outreach organisations
 Broadcasters and other media
 Cell phone and utility companies

23. Financial services industry can play
important role
– so long as it's not, in reality, marketing, for example:
 Indonesia: financial education taken forward initially by Banking
Education Working Group, with a focus on banking customers'
education. Now being expanded into a national financial
education programme, which covers the financial services
sector generally
 the Prudential conducts ‘Investing in Your Future’ seminars
(highlighting key issues involved when making financial
decisions at different life stages – single; married; family
planning; child’s education; retirement) in China, India and
Vietnam to raise financial capability among women, who often
have responsibility for household finances
 Citi has undertaken a range of financial education initiatives,
including developing financial education curricula for children,
teenagers and adults

24. 5. Lessons from
behavioural economics
and from social marketing
programmes

25. Insights from behavioural economics
• Behavioural economics provides pointers to
the sorts of approaches which are likely to be
successful. People tend:
– to be overwhelmed and do nothing if too much
information or too many choices
– to be over-confident about their ability to
manage their personal finances and to ignore
information which calls into question their views
– to struggle to make good decisions – need
training/coaching on good decision-making.

26. Learn lessons from a range of social
marketing programmes
• Lessons which can be learned from a range of
social marketing programmes, including
financial education initiatives, are to:
– keep things as simple as possible
– use relevant and engaging language and
contexts
– repeat messages
– use a variety of methods and channels.

27. 6. Evaluating financial
literacy programmes and
national financial literacy
surveys

28. Evaluation and national surveys
 Evaluation helps to establish what is effective
 Evaluation should be built in from the outset –
otherwise, there will almost certainly be gaps in what
can be assessed
 Evaluating financial literacy projects is challenging –
eg in obtaining objective information on whether
behaviour has changed (some behaviour change may
take years to happen) and in establishing the impact of
the particular intervention
 A national survey can establish a baseline; and future
national surveys can then measure overall impact of
financial literacy initiatives. World Bank is developing a
survey for use in a range of countries

29. Thank you!
Shaun Mundy
shaunmundy@hotmail.com