Poverty Literacy is having the knowledge, sensitivity, and humility to impart respectful (financial) advice appropriate for persons in a low income circumstance.
- Knowledge refers to an understanding and appreciation of the lived experience of poverty.
- Sensitivity refers to the ability to appreciate the various ways in which one’s position of economic privilege (or lack thereof) may influence one’s perspective and expectations.
- Humility refers to the ability to recognize that one's understanding of poverty - why one is facing poverty or how one might manage financially on a low income – may be inadequate and so judgment is inappropriate.
- Respectful financial advice refers to the ability of finance professionals to use the knowledge, sensitivity and humility they have gained to advise on and design products, services and policies appropriate to Canadians living on a low income.
Being poverty literate will help financial and policy experts to
- decide how best to advise low income people how to manage their money,
- make sense of the financial marketplace and design financial products, services, and policies best suited to the needs of people on low income,
- advise on how to manage personal finances and plan ahead for life events such as home ownership or retirement,
- understand and answer questions on how low income Canadians can benefit from local, provincial and national government programs and systems, and
- ensure the best use of public and private resources designed to enable an open and fair distribution of incomes and access to credit.
Did you know...
...if you do not have available credit on a credit card, that a payday loan may be your next cheapest money management option if you need $100 quickly:
- credit card (beyond grace period) = $1.54 or 20%
- payday advance = $21 or 546%
- bounced check = $45 NSF bank fee x # of times the bank automatically attempts to withdraw fees
- utility bill = $46 late/reconnect fees
...there are at least 6 interrelated decision points in determining whether one is even eligible to apply for the Old Age Security and Guaranteed Income Supplement. See John Stapleton's guide to Determining OAS and GIS eligibility for people who come to Canada as adults (external link) for a visual illustration of the types of complexities Canadians must confront.
...the language of a typical Debit Cardholder and Electronic Financial Services contract with a major Canadian Bank has a Gunning Fog Index of 21.8. This index number indicates that approximately 22 years of formal education (i.e., 6th year PhD) is needed to easily understand the most basic of financial contracts. In other words, you need approximately 22 years of formal schooling to understand the language of the contract that confirms you have "received, understood and agreed to this Agreement…”
At present, the financial maze confronting lower and middle income Canadians is arguably more complex than the maze higher income Canadians currently face. At present, developing and educating to read better maps to an overly complex lower and middle income maze sits in troubling opposition to the presence of a simpler higher-income maze confronting those who can well afford to pay specialists to navigate it for them.
For promoting financial inclusion, the financially excluded must have access to neutral and appropriate financial advice that builds their confidence to be included. The financially included must be seen to value the choices made in deprivation and scarcity and to be sensitive to the lived experience of poverty and its resulting financial barriers.