An Innovative Approach to Reaching Canadians and Encouraging Budgeting Behaviour
by: Marcie McLean-McKay, Policy and Research Officer, Financial Consumer Agency of Canada
International research has identified budgeting as a key component of effective money management
1,2. Budgeting helps consumers to prioritize spending to ensure that they will have enough money for the things they need and want. In Canada, data from the
2014 Canadian Financial Capability Survey (CFCS) demonstrate that only 46 percent of Canadians have a budget. But among those who have one, 93 percent say they “usually” or “always” stay within it. This trend holds across all demographic, education and income groups studied.
The Financial Consumer Agency of Canada (FCAC) is currently exploring ways to enable more people to start budgeting, including the use of mobile technology to provide financial education related to budgeting.
FCAC is currently working with
Carrot Rewards to send financial education messages and
online budgeting tool directly to the mobile phones of non-budgeters. The program was first launched in British Columbia and Newfoundland in summer 2016, and was expanded to Ontario in fall 2017.
Results are overwhelmingly positive. Individuals who did not have a budget and who progressed through the three-week program demonstrated measurable improvements in financial knowledge, confidence and budgeting behaviour.
Furthermore, FCAC’s budgeting interventions were successful in enabling non-budgeters, who indicated that they “did not know where to begin”, and those who had no intention of making a budget at the beginning of the project, to create a budget for themselves.
Canadians were highly engaged in this initiative, which also speaks to potential opportunities to further reach individuals through mobile technology and rewards programs.
The findings of FCAC’s budgeting research provide a rich source of data and information. They point to a number of broad messages with program implications for financial education and far beyond.
Some key starting points for future action and investigation:
- Almost half of those who do not have a budget do not know where to begin.
- Targeting non-budgeters with budgeting information and resources leads to measurable impact in increasing knowledge, confidence and budgeting behaviours.
- Confidence appears to be associated with persistent budgeting behavior—those who persist with their new budget demonstrate increased confidence in their ability to make and maintain a budget. Those who discontinue budgeting, tend to be those who haven’t yet gained relevant confidence.
As next steps, FCAC intends to continue its budgeting research through the Carrot Rewards app and will follow-up with participants to assess longer-term impacts of budgeting on overall financial well-being.
The Agency will also leverage Carrot Rewards interventions to analyze barriers to budgeting.
1. https://www.oecd.org/finance/Core-Competencies-Framework-Youth.pdf
2. https://www.oecd.org/finance/Core-Competencies-Framework-Adults.pdf