Wanna get Wiser about Your Finances? Read on!

28 March 2018

A Firstline Securities Limited Blog by: Damien Gill


An NGO based in Washington DC, Jump$tart, defines financial literacy as the ability to use knowledge and skills to manage one’s financial resources effectively for lifetime financial security. Financial literacy is not an absolute state; it is a continuum of abilities that is subject to variables such as age, family, culture, and residence. Financial literacy refers to an evolving state of competency that enables each individual to respond effectively to ever-changing personal and economic circumstances.


Financial literacy has implications at all levels. For one – it is important for individuals to learn to live within their means and manage their money effectively. This has a knock-on effect for the financial system and ultimately leads to a more efficient allocation of resources within the economy.


The opportunities for making poor financial decisions come through life thick and fast. This is a result of easier access to credit and the “buy now and pay later” type transactions. For some, this can lead to poor spending habits that eventually lead to spiralling debt problems. Unfortunately, even those who budget carefully and spend wisely are susceptible to costly financial traps. For instance, some individuals who go in search of higher returns on their investment may not fully understand that these returns are likely to go hand in hand with much greater risk.

While financial literacy is important, the need for financial education has also assumed great urgency. The banking sector now offers a wide range of products and services on both the deposit and loan side.

Consumer choice is always welcome, but it has now come at the cost of complexity in decision making for even the most basic financial products.

An Australian study suggested that the ten (10) percent of least financially literate individuals within the economy who were exposed to financial education could raise their incomes and reduce the number of unpaid bills on their books. The study estimated that over the span of 10 years this could generate $6 billion in GDP to the economy and the create 16,000 jobs. To put it lightly, money spent on financial education is likely to make its return and then some in social welfare.


If we accept that financial literacy can help families and individuals, then it’s not hard to see the benefits for the stability and efficiency of the financial system.

Financial institutions tend to lend credit according to the times. For instance, when times are good, credit is more readily available. Similarly, when economic times are bad lending standards are tightened.

Financially-educated individuals are likely to make better spending decisions regardless of the ease and availability of credit. As a result, they have a far better chance of riding out economic downturns within the economy.


What is good for the individual is usually good for the economy. We have discussed the positive benefits derived from prudent spending but encouraging households to save also comes with its merits for the economy. Economic development is very much about successfully channelling domestic savings into productive investment opportunities.

Likewise, prudent use of credit is both beneficial to the individual and the economy. Credit can provide housing and transportation, both of which contribute to economic activity and productivity. It can also make available student funding so that members can make important contributions to the intellectual capital of the country.

Lastly, any market economy functions more effectively when there is a great degree of financial literacy. The sub prime mortgage crisis that occurred in the US in 2008 was a result of many things but most notably the inability of the borrowers to never fully understand the risks associated when taking a mortgage.


The Government of Trinidad and Tobago has over the past decade made valiant attempts at improving financial literacy within the country. This is evidenced by the establishment of the National Financial Literacy Programme (NFLP) on January 31st, 2007. Its mission statement is simply “to empower citizens with the requisite knowledge and skills with which to make informed financial decisions.”

Despite these efforts, Mr Dominic Stoddard, Financial Services Ombudsman stated recently that by his estimates, 21% of the Trinidad and Tobago population remained unbanked. In fact, a financial literacy survey conducted by NFLP suggested the financial literacy scores to be the following:

Source: National Financial Literacy Programme – Ladi Franklin

In addition, the survey suggested the most vulnerable in society to be young people (aged 16-24), mature adults (aged 60 & over) and female headed households. NFLP has for this reason targeted several groups as priority which include:

  • Primary and Secondary School Students
  • Tertiary students and young adults
  • Employees in the workplace
  • Communities and Niche Groups
  • Micro and Small Enterprises


Financial Education is not just important to society but fundamental to the citizens, the financial system and the economy. It does, however, come with its challenges. Translating knowledge into action is not always easy. Sustainability and reinforcement of practices isn’t straightforward either. We as citizens, therefore, need to make good use of the information made available to us to make the best possible financial decisions for ourselves and our families. What is likely to occur as a result is the creation of a more efficient financial system and a more effective T&T economy.

My first step suggestion: forward our Firstline blogs to friends and family! Also, let us know what topics you’d like to see us cover by contacting us at info@nullfirstlinesecurities.com. We’d love you to share in our knowledge bank!

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