The financial competence of low income households in Samoa : a report prepared for the Pacific Financial Inclusion Programme

This study examines the financial competence of low income households in Samoa. The financial competencies which have been measured by the study were determined by asking rural and urban low income households in Samoa to describe the financial activities they needed to be able to undertake in order for the household to to manage its cash-flows effectively. The competencies were reviewed by a panel of in-country subject matter experts. Overall the study has found adults who are responsible for financial management in low income households demonstrate generally low or low-moderate levels of financial competence across most aspects of household financial management. This means these households are not able to competently undertake the financial activities the household needs to undertake to manage its finances effectively. The lack of competence may be due to several factors: Access to financial services, knowledge of how to use financial services and manage money, or attitude to money and financial services generally. If low income households in Samoa can increase their level of financial competence then the household’s ability to increase the wellbeing of the members of the household through better management of household cash-flows will also increase. Households in which the adults responsible for the management of the household’s finances work together to manage current household cash-flows and to plan and budget future household cash-flows, and which have a bank account, are generally more financially competent than households in which the adults responsible for the management of the household’s finances do not work together to manage household finances, do not develop financial plans and budgets and do not have a bank account.