Video: Sustained behaviour change through financial education

Nicole Rivest: So hello everyone, and on behalf of FCAC, I'd like to thank you all for coming. Glad you've made it out in this not so happy weather.

So I'd like to first thank staff from Carrot Rewards, Lauren White and Megan Nobrega, and I hope you had the opportunity to visit them at their poster earlier today. I know they'll be around for the rest of today and also tomorrow as well. Lauren and Megan contributed to the design and implementation of our two studies that I will be talking about with you today.

So today, I'm happy to be here with you to share how the Financial Consumer Agency of Canada has leveraged mobile technology to deliver our financial education messaging. And by doing so, we've been able to create sustained behaviour change among non-budgeters.

Now, why did we focus increasing budget behaviours specifically? It's because we know that budgets act as a self-control mechanism. And research has shown that budgeters use priority planning to reduce their overspending. So today, I'd like to talk to you about an overview of our two -- methodology behind our two budgeting studies, as well as the key findings from these studies.

So for those of you who aren’t as familiar with Carrot Rewards, Carrot Rewards is a mobile application that aims to empower Canadians to have, adopt better lifestyles and healthier choices. And it does so by offering Canadians a chance to receive loyalty rewards points such as Petro-Points, or Scene points in exchange for reading educational messages, completing quizzes or watching short videos.

So in 2016, FCAC developed a pilot study on the Carrot Rewards App, and we offered our study to users in B.C. and Newfoundland and Labrador. We had two goals of the pilot: the first was ultimately to increase the budgeting behaviour among non-budgeters; and the second goal was to evaluate if a mobile platform was an effective way to do so.

So initially ten -- approximately 11,000 Carrot users in B.C. and Newfoundland and Labrador received a first financial education messaging which targeted budgeting behaviours. We were then able to identify budgeters from non-budgeters. And over the course of three weeks, we targeted these non-budgeters with further financial education messaging. We aimed to increase their confidence to budget, their knowledge to budget and their budgeting behaviours. And we found out they were successful in doing so.

For instance, we were able to increase the budgeting behaviour among these non-budgeters by 14%. So 14% adopted the use of a budget by the end of the pilot. But it was also important to us to evaluate the long term impacts of our study.

So that's why, about 18 months later, we participated in a return-to-sample, and we called this our follow-up study. There are three main groups of participants in our follow-up study. The first is who we call our reference group. So these are individuals who had a budget at the beginning of the pilot, and therefore only received that first initial financial education message. The second group and third group are our intervention group. So these are individuals who received all of our financial education messaging, and by the end of the pilot, they either had a budget or they had a plan to budget. So in total, approximately 5,000 participants completed our follow-up study.

We had three goals of the follow-up. The first, as I mentioned, evaluate the persistence of budgeting behaviours. The second was to determine if a budget had an impact on their financial outcomes and attitudes. And the third was to identify any barriers to budgeting that existed among non-budgeters at the follow-up.

So we found overwhelmingly positive results. We found that our budgeting financial education messaging in the pilot creates sustained behaviour change among non-budgeters. So, for example, among our intervention group who had a budget, by the end of the pilot, we found that 54% persisted in their budgeting behaviours 18 months later.

But as I mentioned, we wanted to take this a step further. Yes, we were able to increase the budgeting behaviours of non-budgeters, but why is this important? How does this relate to financial outcomes and attitudes? And we found a positive link between budgeting behaviours and attitudes. So, for example, among the budgeters at the follow-up, we found that budgeters were using their budgets to pay down their debts, save for emergencies, and to increase their savings for the future. We also found a positive link between budgeting behaviours and their ability to pay their bill payments.

So we asked everyone at the follow-up: Thinking of the last 12 months, how well have you been keeping up with your financial commitments? When we looked at our reference group, so here these are individuals who began the pilot with a budget, only received that first financial education message, and are now still budgeting 18 months later. We see that 85% are keeping up well or very well -- 84, sorry, are keeping up well or very well.

Now, when we compare this to the non-budgeters who did not adopt the use of a budget by the end of the follow-up or 18 months later -- I skipped my punch line there, well anyway, we find that 45% are keeping up well or very well. And then we look at the groups who had a budget as a result of our intervention and are still budgeting, we see that 70% are keeping up with their bill payments well or very well. So we see that they're outperforming the non-budgeters and having an outcome that closely resembles to those individuals who have been budgeting for a longer period of time.

We see a similar pattern when we look at confidence to budget. So we see, as you might expect, individuals who are budgeting are more confident in their ability to make and follow a budget. But why is this important? It's important because it shows the positive feedback loop between budgeting behaviours and confidence. So as individuals learn from their trials and errors and their successes and failures, they're able to increase their confidence and persist in their budgeting habits.

It's also important when we consider barriers to budgeting. For example, at the follow-up, we asked individuals what their top barriers to budgeting were. And the two most common barriers were that they didn’t need a budget to manage their finances. And the second one was that they felt overwhelmed managing their money. Among these overwhelmed non-budgeters, only 38% are confident or very confident in their ability to make and follow a budget. This group in particular is a vulnerable group. And we know that because we found that they had lower incomes, lower proportion for keeping up with their financial commitments well or very well, and almost half had a focus on the present day rather than saving for the future.

But, as always, we have good news around the corner. We also asked all of our non-budgeters what is one thing that you would change in your money management abilities? And we found that the top areas that they wished to change — for example setting financial goals and building savings, prioritizing spending, and having a higher awareness of where their money is going — directly aligns with the benefits that budgeters were receiving from having a budget. So we see that 31% of budgeters are using their budgets to be aware of where their money is going, and we also see that 21% are using their budgets to set financial goals and build savings.

So, in conclusion, I'd like to leave you with a summary of our key findings. The first key finding was that financial education can have a sustained impact on budgeting behaviours. The second finding was that budgeting behaviours could be associated with positive financial outcomes and attitudes. And our third finding is that budgets can help individuals achieve their money management goals.

So I would like to thank you all for listening, and I'll hand it on to Nick. Thank you.