WHY WE EXIST

The National Financial Literacy Programme exists for the sole purpose of developing a nation of citizens who are conscious about, and capable of managing their finance. As we are aware, the economy is currently experiencing extensive growth. Over the past ten years, our per capita income, which is a measure of the average wealth of each citizen, has moved from around US$4,500 to US$14,000 currently. Even after adjusting this value to account for the rise in prices, real per capita income has more than doubled. With this increase in income, there has been an observed rise in private consumption and consumer debt instead of the increased savings and better credit management that should have been experienced.We therefore have as our objectives of the programme:
  • Improving the financial literacy of the population to make better financial decision making easier
  • Giving individuals the facts needed to make the right financial choices
  • Providing a basic understanding of Banking and Finance including the features of the various products that they are likely to access in their day to day activities
  • Giving citizens skills and confidence to function in a rapidly advancing financial environment
  • Increasing the awareness of changes in the financial environment and the ability of people to take advantage of opportunities which may arise, for example making the best of a small business opportunity
  • Teaching individuals and families to conduct personal financial budgeting suited to their life circumstances. This is to prevent unnecessary personal debt and/or bankruptcy
  • To encourage planning ahead and so increase citizens’ financial preparedness for incidents in their work life and for retirement
This type of programme is not something new as if one looks in the international arena, one will note that programmes like this have been practiced in other parts of the world, especially in developed countries. Both developed and developing countries are recognizing that changes in the financial system, including the increasing complexity and diversity of financial products, are creating an urgent need for financial literacy.

Some examples include the United Kingdom, whose Financial Supervisory Authority (FSA) (the Regulator of the financial system) has launched a nationwide campaign to improve the financial skills of the population.

In the United States, where personal bankruptcies have been increasing sharply, the Federal Government and the Federal Reserve (the nation’s central bank) have entered the field of financial education in a big way. Previously, it was largely left up to the private sector.

In Canada, Australia, New Zealand and throughout Asia, either the Central Banks or specially created government agencies are devoting considerable resources to financial education programs.

Many citizens in Trinidad and Tobago have limited knowledge about basic good financial practices and money management. It is therefore our vision, similar to the international examples, to create individuals who have the capacity to plan ahead, keep track of their finances, respond to market signals in the right way, and are responsible with their money.

The core financial literacy elements that we wish to cover are savings, thriftiness, budgeting and borrowing, investments, insurance, debt management, taxes and national insurance, planning ahead, financial fraud, choosing financial products most suited to one’s needs and estate planning, including securing house and land and the use of mortgages.We want to encourage our citizens to make frugality, which is, exercising good sense in their money management decisions, part of their lives.

The programme is aimed at making our citizens interested in the significance of personal financial planning, budgeting and money management in addition to increasing the awareness of the population about the financial products and services at their disposal.

Some Quick Facts Over the last ten years:
  • Non-energy per capita GDP has almost doubled from around US$4,500 to us$14,000 currently.
  • The labour force has increased by about 100,000
  • Employment has increased by 140,000
  • More young and middle-aged people are combining work and study
  • Small business or self-employment has become more widespread
  • Young people are leaving home earlier to live on their own.
  • Credit cards which were once confined to a small segment of the society are now being marketed to the wider population by the commercial banks
  • Rapidly changing lifestyles have forced the bulk of the population to open bank accounts, to use ATMs, to own credit and debit cards and generally to participate actively in the formal financial system.
  • The average consumer is now required to make complex financial decisions between fixed and variable rate mortgages, contract installment loans, choose from a range of checking accounts and select from any number of savings instruments.
All these are reasons why there is a great need to increase the level of financial literacy in the nation!

 

Why We Exist