Reducing the Public’s Financial Vulnerability

In 2019, the Joseph Rowntree Foundation found that half of UK adults were financially vulnerable, with 8 million working-age adults, 4 million children and 2 million pensioners living in poverty.

Research led by academics in the Centre for Business in Society (CBiS) investigated the effectiveness of different approaches to help adults in low-to-moderate income households successfully manage their money.

The research findings indicated that many people lack the ability to appropriately manage their personal finances, which has contributed to their financial vulnerability.

The initial research, funded by the Money Advice Service (MAS) was a joint project between Coventry University’s Professor Sally Dibb, Dr Lindsey Appleyard, Dr Helen Roby, Dr Hussan Aslam and The Open University. The ‘Managing My Money for the Just About Managing’ project used a research intervention to improve the financial understanding of people in low-to-moderate income households and to increase their ability to make good financial decisions.

Qualitative and quantitative data was collected across eight sites from 4,195 participants who were credit union members, housing association tenants, local community residents and mature students from a Higher Education college. The findings showed that teaching materials as well as budgeting and saving tools improved participants’ understanding of how to manage their money. Savings data gathered from the credit unions supported these results, showing that participants were more likely after the intervention to budget and were saving an average of £21.73 more after just one month.

Feedback from community volunteers in Milton Keynes who supported the project found that the biggest effect was on reducing people’s spending.

The final project report concluded there was: ‘…good evidence that a short, low-cost, behaviourally-informed intervention can work to improve financial behaviour and resilience and can do so for people who are Just About Managing, who are most in need of financial capability but tend to be hard to reach’.

The findings have directly influenced the policies and practices of several national organisations and community bodies; for example, the research revealed preferences among younger participants to manage their money using apps and web-based platforms. These insights were the basis for a subsequent Coventry University Impact Acceleration project to create a free-to-use MoneySkills app. The app has been used by national and community organisations to support staff, customers, students, and community members.

After submitting their research findings to the MAS Consultation on Working-Age Money-Management, the Coventry team contributed to the UK Strategy of the Money and Pensions Service (MaPS).

UK organisation Salary Finance, which has a membership of over 500 UK employers representing 3 million UK employees, used the research findings in a toolkit developed for its members.

The Centre for Community Finance Europe, a membership organisation for 46 credit unions that serve 150,000 people across Europe, invited the Coventry team to produce a White Paper on financial capability guidelines for its members. The White Paper guided these credit unions on how individuals can be helped to budget, save, set financial goals and avoid making emotional decisions that might increase their financial vulnerability.

Financial technology company Creditspring is using the MoneySkills app via its portal to support the financial stability of its 10,000 UK members. In addition, training offered by the national England Illegal Money Lending Team has used the app in a virtual course to prevent people from falling victim to loan sharks and to help them rebuild their finances. Within six months of the course starting in mid-2020, 123 people attended the training from organisations embedded within vulnerable communities, including: Citizens Advice, YMCA, Disability Advice, Big Local - Local Trust, the DWP, schools, colleges, councils, housing associations, mental health charities and the police.

This ongoing research theme is all the more significant in today’s climate of increasing poverty and rising living costs. A set of projects is currently underway, with partners including Barrow Cadbury, EPSRC, Fair4All, the Money and Pensions Service and abrdn Financial Fairness Trust.