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Financial capability is the knowledge, skills and confidence to manage your money well.

This includes understanding financial products, being able to use them and having the confidence and motivation to do so. 

Financial Inclusion and Capability

Government action - Policy & research 

Strong financial capability and understanding of financial products and services helps to prevent financial exclusion. Work to develop financial capability can generally be split into education (running workshops or classes); information (providing people with accessible, clear guidance) and advice (offering one-to-one advice on an individual's financial situation).

More information and resources for people who deliver financial capability training and support is available in the resources section

Most people - even those with high financial capability - will need some form of support around managing their finances at some point in their lives. In particular, 'life changes', such as having a baby or retiring, are key points which change personal financial situations.

Financial Inclusion and Capability Explained gives a more detailed description of financial capability and some of the main initiatives around it (Transact & The Resolution Foundation 2009).

Policy and Research

Improving Financial Capability Among Offenders - The Financial Services Authority (FSA) together with National Offender Management Service (NOMS) piloted three projects to improve financial capability amongst offenders. The report assesses the effectiveness of each of the projects and the comparative lessons learnt. (Ipsos Mori 2010)

Economic Impact and Regeneration in City Economies: The Case of Leeds (Oct 2009) - The research describes the benefits of investing in financial inclusion initiatives both to excluded individuals and to the wider economy. Its findings indicate that investment in financial inclusion generates a significant boost to the local economy and highlights the business case for investing in financial inclusion initiatives.
Payments Council Financial Inclusion Policy (Oct 2009) - The Payments Council has published a financial inclusion policy to ensure that the issue is given full consideration before any innovations or changes are made to the payments system.
Financial capability and wellbeing: Evidence from the BHPS presents the analysis of a project that focuses on the potential relationships between people’s financial capability and their psychological wellbeing (FSA 2009)
Short Changed: financial exclusion, a guide for donors and funders (July 2008) A New Philanthropy Capital report giving an overview of the financial inclusion sector and the issues.
Financial Inclusion in the UK: a review of policy and practice (July 2008) An overview of the work aimed at reducing financial exclusion in the UK.
Financial Inclusion: an action plan for 2008-11 (December 2007) HM Treasury document setting out in detail how the government will use the £130m Financial Inclusion Fund.
Financial Inclusion Policy and Practice (2007) A New Policy Institute report, published by the Friends Provident Foundation, uses the Government's model of focusing on five key areas to review progress in financial inclusion. 
Financial Exclusion in Ireland (Combat Poverty Agency 2006) This study examines the nature of financial exclusion in an Irish context from the perceptions and experiences of low-income consumers. It identifies the reasons why these consumers do not use financial services and identifies their unmet needs. 
Rethinking financial capability: lessons from economic psychology and behavioural finance (IPPR 2006) considers ways to motivate people to change their financial behaviour
HM Treasury Select Committee Reports into Financial Exclusion

The Treasury committee's inquiry into financial exclusion lead to the following three reports:

• Financial Inclusion: the roles of the Government and the FSA, and financial capability: Published on 28 November 2006 - click here

• "Banking the unbanked": banking services, the Post Office Card Account, and financial inclusion (Published on 19 November 2006) - click here

• Financial inclusion: credit, savings, advice and insurance (Published on 16 November 2006) - click here

The LJMU Research Unit for Financial Inclusion - The Unit undertakes academic, action and evaluative research in a wide range of areas related to poverty, financial exclusion and the development of financial services for lower income households. Click here for the website
Opinion Leader Research report on deliberative workshops with financially excluded people (Financial Inclusion Taskforce Working Group, May 2006) This report assesses the attitudes of financially excluded people to mainstream financial services and their opinions on how these services can be made more appropriate and accessible..