You are currently browsing the tag archive for the ‘Financial Health’ tag.
> Posted by Elisabeth Rhyne, Managing Director, CFI
At CFI we often talk about financial health as if it is a crisp, free-standing concept. Moreover, by connecting financial health to financial inclusion we imply – and hope – that we can affect financial health by offering the right kind of financial services and/or developing a person’s financial capabilities. However, while there is truth to this view, it is sometimes easy to overestimate the power of financial services. We need to think about how both financial and economic factors intertwine to create outcomes. If we compartmentalize financial actions, we ignore the very powerful economic factors that influence financial health.
As defined by the Center for Financial Services Innovation (CFSI) – and embraced by us at CFI – three elements must all be present to declare a person, family or microenterprise to be financially healthy:
- Balanced day-to-day money management – outflows balanced with incomes over time.
- Protection from shocks – ability to draw down, borrow or call upon resources to lessen the blow when bad things happen.
- Pursuit of goals – ability to accumulate resources for medium to long-term purposes, whether personal or productive.
In speaking with low income people around the world, we find that many people intuitively define financial health in these terms, and nearly everyone tries to pursue financial health in their own lives. But achieving these three elements is not just a financial task. It requires both economic and financial actions. (It also hinges on personal choices and capabilities, but we will set these aside for now.)
> Posted by Jeffrey Riecke, Senior Specialist, CFI
If you’re based in the United States, you’ve likely heard about how student loan debt is problematic and has been for years. The growing volume of student debt that has become more and more the norm is so high, its effects can be overwhelming. But how bad is it? Is it just a matter of students needing to hunker down (a little longer) and pay their dues (a little more)?
> Posted by Elisabeth Rhyne, Managing Director, CFI
Last month CFI invited all of Accion’s staff, both inside and outside the U.S., to complete a questionnaire on their own financial health. Many of you have seen and even taken this survey (see blog post here). The survey is broadly based on the U.S. financial health framework developed by the Center for Financial Services Innovation (CFSI), which we believe is a better fit for Accion employees than the global financial health framework we developed with CFSI for base-of-the-pyramid markets. In this post we report on what we found when “Accionistas” took the survey.
It turns out that Accionistas are a pretty financially healthy bunch. Three quarters of the 122 people who took the survey scored in the good or excellent range. Given that Accion employees have steady employment with fringe benefits (pension savings plan, health insurance), this is not terribly surprising. As Jonathan Morduch and Rachel Schneider show in The Financial Diaries, income volatility is one of the biggest causes of financial stress among American families. Thankfully, Accion employees, like most employees of international development non-profits, can count on the same paycheck week after week, and this makes the task of staying financially healthy much easier. Health insurance is also an essential source of financial protection, as is car insurance.
BEFIT photographers. Photo Credit: Elisabeth Rhyne
> Posted by Elisabeth Rhyne, Managing Director, CFI
Imagine a country unlike any you have ever seen – a mountainous land without Starbucks, where pop stars sing praises of the king, and men wear skirts with knee socks. You might be tempted to relegate the country to the category of charming or exotic. But that would be a disservice to Bhutan, which presents itself as kind, intelligent and ready to participate in the modern world.
I attended the Bhutan Economic Forum for Innovative Transformation’s summit on “Equitable Growth through Financial Inclusion” held last month in Thimphu, Bhutan’s capital city, and that provided me with an opportunity to hear in depth about its unique development philosophy – Gross National Happiness (GNH). Before we turn to the connections between GNH and financial health, here is some important context. Read the rest of this entry »
> Posted by Allyse McGrath, Specialist, CFI
How financially healthy are you? Financial health is a relatively new term in the financial inclusion community, and aims to provide a model for assessing how well one’s daily financial systems enable a person or household to build resilience to shocks and pursue opportunities and dreams. Last month, CFI in collaboration with The Center for Financial Services Innovation (CFSI) and Dalberg’s Design Impact Group (DIG) launched the results of a year-long study into how to adapt CFSI’s U.S.-based financial health framework to a developing country, BoP context. The study found that the concept of financial health can be applied to lower-income people in emerging markets, though the indicators and measures of financial health in this context were different. We encourage you to check out the full report, Beyond Financial Inclusion: Financial Health as a Global Framework, to learn more about our financial health framework for the developing world.
We also encourage you to engage with your own financial health in order to get a better grasp on the concept. To better understand the concept ourselves, CFI and Accion staff (building on the work of our year-long study and on the U.S. Financial Health Framework of CFSI) recently participated in an organization-wide financial health survey. Over 120 Accionistas took the survey and received assessments of their financial health. After reviewing the responses, we have uncovered some interesting insights into how people’s debts evolve as they age and the diverse set of tools they are using to manage their financial lives.
As a next step in the process of understanding, we want to share this survey with you. We hope it will help you both engage with the concept of financial health and potentially improve your own financial health. We also hope your feedback will help us strengthen our framework and this tool. Finally, we look forward to reporting back soon on the financial health of CFI’s (anonymous) blog readers!
> Posted by Sarah Rotman Parker, Director, the Center for Financial Services Innovation, and Sonja Kelly, Director, the Center for Financial Inclusion
The following post was originally published on the CGAP blog.
Over the past year, the Center for Financial Services Innovation (CFSI) and the Center for Financial Inclusion (CFI) have explored financial health in emerging markets. We wanted to understand whether the concept of financial health, promoted widely in the United States by CFSI, could be used as a relevant framework to understand consumers. Financial health is defined as coming about when your daily systems help you build resilience and pursue opportunities. Our working hypothesis was that financial health could serve as a method of tracking progress in emerging markets since it is what people strive to attain, and therefore is one of the core aims of financial inclusion.
Our work took us to rural and urban areas in Kenya and India. With the help of the Dalberg Design Impact Group and funding from the Bill & Melinda Gates Foundation, we asked consumers in these markets questions about their financial lives. These questions ranged from how much money they could come up with if they liquidated all of their assets to whether their friends would help them financially in the case of an emergency (and about a hundred other questions in between these two ends of the spectrum).
The aim of the research was to identify the key indicators of financial health in a developing world context, similar to the eight key indicators that CFSI had identified for the U.S. market. We found that while financial health as a concept holds in countries like India and Kenya, the indicators to define and measure financial health look somewhat different from those in the United States. The resulting framework can be summed up as follows (and the full report is here).
> Posted by Tanya Ladha, Senior Manager, Center for Financial Services Innovation, and Elisabeth Rhyne, Managing Director, CFI
The following post was originally published on NextBillion.
Meet Shabana. She is a middle-aged woman, lives in a large metropolis and works at one of the city’s bustling train stations. One day, she suffered a severe workplace injury and wasn’t able to work for weeks. With no support from her employer, she realized how financially vulnerable she was, and decided at that moment to make a change. After recovering from her accident, she began saving almost 30 percent of her income, and after a year was shocked – and empowered – by the considerable financial cushion she had built herself.
Shabana’s story is one of resilience in the face of vulnerability, one of adapting daily habits, one of planning and achieving goals. It is a story of financial health, and it is universal. While Shabana lives in Mumbai, India, her story is relevant for millions of individuals around the world, both in developing and developed countries, including here in the U.S. It is this core concept that pushed the Center for Financial Services Innovation (CFSI), in partnership with the Center for Financial Inclusion at Accion and funded by the Bill & Melinda Gates Foundation, to explore how a U.S.-oriented financial health framework could translate into a developing world context.
> Posted by Center Staff
Looking Beyond [Universal Financial] Access
CFI defines Financial Inclusion as “a state in which everyone who can use them has access to a full suite of quality financial services…”
The World Bank’s latest edition of the Global Findex revealed that between 2011 and 2014 over 700 million people were newly financially included, at least according to the top line metric of account ownership. The Universal Financial Access program continues to drive home the message that financial access is within reach, even possibly by 2020. We at CFI are now shifting our focus to the other elements of financial inclusion, those which we have always stood by and advocated for, but those that will certainly take longer than 2020 to reach.
Our definition continues:
“… provided at affordable prices, in a convenient manner, with respect and dignity. Financial services are delivered by a range of providers, in a stable, competitive market to financially capable clients.”
In this issue of our ongoing Financial Inclusion 2020 e-magazine series you will find insights from recent or ongoing CFI research projects. In a rundown of our Business of Financial Inclusion report, you will hear what commercial bank managers told us about the opportunities and challenges that they face in reaching unbanked and underbanked customers. You will also dive into how commercial banks are partnering with financial technology startups to serve new customers and broaden their product offerings. In the e-zine’s research spotlight, we take a critical look at how effective G2P payments have been in advancing financial inclusion. We also explore the role of microfinance in microenterprise growth. In addition, we discuss the importance of two emerging concepts, financial health and financial capability, and what these two frameworks mean for regulators, providers, and customers.
> Posted by Jeffrey Riecke, Communications Specialist, CFI
This morning I had the luxury of splitting an Uber with my girlfriend for our to-work transportation. Neither she nor I are affluent by United States standards, but I would say we’re relatively financially healthy. Most months, our expenses like rent, food, medical bills, and student loans are low enough compared to our incomes that we have money left over for things like Uber rides, dinners out, and the occasional vacation. We have formal financial products and understand them well. Financial health for us means the combination of our financial flows and our financial products positions us for financial stability in the immediate and long-term, even as we grow older and our financial demands dramatically change.
Building financial health, for me, requires attention to my day-to-day financial activities that help build my resilience and allow me to take advantage of opportunities. It’s having savings quietly accumulating for a rainy day or for that bicycle purchase. It’s having access to loans that help if I want to go back to school, buy a house, or start a business. It’s the ability to pay up when an emergency visit to the hospital is necessary, and it’s the confidence that if my house is broken into I can replace my possessions.
My own financial health is very much related to the unique day-to-day financial needs, opportunities, and emergencies that exist in my life. Someone who is unemployed, or older, or supporting a child, or enrolled in school would have a much different assessment of their own health. Similarly, someone in a low or middle income country—where the Center for Financial Inclusion focuses most of its attention—would have different financial needs and therefore different financial health. Despite these differences, however, the thing I’ve noticed is that many of the big financial issues around the world are the same. As part of the Center for Financial Service Innovation’s (CFSI) financial health blog contest, I wanted to offer some observations along these lines.
Facebook
Twitter
Recent Comments