Large parts of Scotland’s population, such as many young or unemployed people, lack financial know-how according to new research from Edinburgh Napier University’s Employment Research Institute. The Scots most likely to have problems in their ability to manage their money are:
- younger people
- those on low incomes
- those with children
- those with poor levels of education, literacy and numeracy needs
The new research highlights current high levels of unemployment and personal debt and the need to address and improve financial capabilities across Scotland, particularly for the most disadvantaged and those with reduced incomes.
The Employment Research Institute in Edinburgh Napier University was commissioned by the Scottish Government to provide an overview of current evidence on financial capability of Scots in relation to disadvantage.
The evidence suggests that unemployment and debt issues can have serious negative consequences, not only on individual and household finances, but also on health and well-being and employability. They also affect local and national economies in terms of reduced spending because of people paying higher than necessary interest rates and the employability of job seekers.
Professor Ronald McQuaid, director of the Employment Research Institute at Edinburgh Napier University said: “The ability for individuals to manage their money or not has a knock on effect on the wider economy. In the current economic environment particularly, improving financial capability requires co-ordinated action by the government, other relevant authorities, such as Community Planning Partnerships, and private and third sector bodies.
“Those disadvantaged groups who are financially incapable, and likely to suffer significant negative consequences when things go wrong, need particular support. This should, where appropriate, be linked to other forms of support throughout the life-course, rather than being treated in isolation.”
The researchers analysed the main components of a financially capable person which included abilities, understanding, competence, knowledge and motivations to deal effectively with financial issues. A financially capable consumer is able to deal effectively and confidently with:
- the day to day management of finances
- planning ahead (for retirement and unexpected events)
- efficiently selecting financial products and understanding these products
- knowing where, and how, to seek financial advice
- having the motivation to efficiently manage finances and effect change
