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Oran Hall|Putting financial literacy front and centre

It is catching on. More efforts are being made to raise the level of financial literacy in the Jamaican population to foster better financial behaviour. This is timely, because financial literacy is increasingly becoming a necessary core skill for consumers as the financial landscape becomes more complex.

Just last week, the Gleaner carried an article titled ‘JN Group set to launch financial academy’. The objective of the academy is to help Jamaica Nationa, JN,l customers make better financial decisions by providing information, training and mentorship. This comes out of the concern over the likely negative effects of the low level of financial literacy in the country. These effects include low credit management, increased debt burden, and exposure to fraud.

The academy expects to raise the level of money management, financial awareness and skills, and provide coaching support to manage debt to achieve financial freedom. This initiative has evolved from the JN Wise Aspiring Youth Programme, which is a banking initiative to promote financial literacy and empowerment for youth 18-34 in tertiary technical, vocational and skills training institutions, and community groups.

The Jamaica Stock Exchange, for its part, has been active in promoting financial literacy, with a strong emphasis on investments, through several programmes, including the School’s Education Programme for high-school and tertiary students; the Workplace Outreach Programme for workers in business organisations; the Teacher’s Education Programme for teachers in our schools; and the Stock Market Game, aimed at helping participants understand the stock market and how it works.

In 2012, Jamaica carried out a financial literacy measurement exercise using the OECD International Network on Financial Education core questionnaire, developed to capture the financial literacy of people from different backgrounds in a wide range of countries.

For the survey, financial literacy was defined as ‘a combination of awareness, knowledge, skill, attitude and behaviour necessary to make sound financial decisions and ultimately achieve individual financial well-being’.

The survey instrument took the following into consideration: ‘A financially literate person will have some basic knowledge of key financial concepts and the ability to apply numeracy skills in financial situations.’ Those include the concepts of time value of money, interest on loan, compound interest, risk and return, inflation and diversification. Less than half of Jamaicans surveyed gained a high score for financial knowledge.


Behaviour is seen as the most important element of financial literacy. The survey saw the positive outcomes from being financially literate as being driven by behaviours, such as planning expenditure and building up a financial safety net, but linked negative behaviours, such as overusing credit, as contributing to the deterioration of financial well-being. In terms of financial behaviour, fewer than 60 per cent of Jamaicans gained a high score.

The survey concluded that Jamaicans, when compared to participants from other countries that took part in a similar survey, were good at planning for the long term but were less skilled in short-term money management, especially paying bills on time and monitoring personal financial affairs. Only 38 per cent of Jamaican respondents, individually or jointly, having a budget, but 80 per cent reported having actively saved in some way.

With attitudes and preferences being seen as important elements of financial literacy, it was posited that people who have a negative attitude to saving for the future, for example, will be less inclined to such behaviour. Where short-term wants are prioritised over long-term security, there is less likelihood to provide emergency funds or to make long-term financial plans. In terms of financial attitudes, almost two-thirds of Jamaicans gained a high score.

Based on the survey, there is a positive relationship between knowledge and behaviour among Jamaicans. Higher knowledge scores are associated with higher behaviour scores. Jamaicans also show a positive relationship between financial attitudes and behaviour. Those with a greater tendency to short-term gratification reported lower behaviour scores.


The survey showed that, unlike most other countries, there are no gender differences in financial knowledge among Jamaicans. The same is true in relation to attitudes, and men scored only very marginally higher than women in terms of behaviour. However, people with higher levels of education and those with higher incomes have higher levels of financial literacy.

The relationship between age and financial literacy is interesting. From the survey, young people under 20 are less financially literate than those in the 20 to 29 age group, who are less financially literate than those in the 40 to 59 age group; and individuals 30 to 59 have a higher score than older and younger respondents.

I wonder to what extent the situation has changed since this exercise 10 years ago.

By strongly focusing their financial literacy programmes among students in high schools and tertiary-education institutions, the JN Group and the Jamaica Stock Exchange, even if out of their own self-interest, are providing for important groups that must be financially literate to bring about sustainable long-term change.

Another group must also be provided with meaningful financial education . This is the pre-secondary-school students. Beyond that, the effort requires more sweeping coverage in terms of target groups and the aspects of financial education covered, with more organisations and the Ministry of Education and Youth being involved.

Oran A. Hall, the author of Understanding Investments and principal author of The Handbook of Personal Financial Planning, offers personal financial planning advice and counsel. Email:

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