A new mobile app to encourage budgeting

May 4, 2017

By Jane Rooney, Canada's Financial Literacy Leader

Recently, I wrote about the National Research Plan. In that blog post, I explained the importance of research in developing financial literacy programs, tools, and information campaigns for consumers, and I outlined the plan’s four key priorities.

This week’s blog will look at one of those priorities: budgeting. There may be no better tool for reaching financial goals than a personal budget.

Research shows budgets work especially well when money is tight. Having a written budget enables people to commit to a spending plan and allows them to set priorities for making purchases.

Data from the 2014 Canadian Financial Capability Survey (CFCS) tell us only 46 percent of Canadians have a budget. But among those who have one, 93 percent say they “usually” or “always” stay within it. And the numbers are the same regardless of demographics such as gender and income.

So how do we enable more people to start?

Last summer, FCAC piloted an innovative approach to encouraging non-budgeters to do just that. We sent financial education messaging and our online budgeting tool directly to the mobile phones of non-budgeters through a mobile app. In exchange, they received incentives for participating. FCAC researchers then studied the impact of the program on the users’ knowledge, confidence and behaviours related to budgeting.

Our findings uncovered some very compelling results—at the start of the pilot, nearly half of non-budgeters said they didn’t  know where to start. Over the month that followed, we continued to send these participants messages about the importance of budgeting and how to go about setting up a budget.

Our results showed that this approach worked. Fourteen percent of non-budgeters began budgeting. Non-budgeters increased their knowledge about budgeting and confidence in their ability to create and maintain a budget also increased.

This innovative pilot project has shown us that directly targeting financial education to consumers has the potential to result in positive behavioural change and improve financial well-being for large numbers of Canadians.

In my next blog post, I will detail more research priorities from the National Research Plan: building savings, paying down debt and choosing the right financial products.

So stay tuned!

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