Saturday, January 20, 2018

Are you savvy, striving, struggling or slow?

Trinidad and Tobago are generally satisfied with their lives, comfortable living here and optimistic of their financial future.

This, according to the findings of the Trinidad and Tobago Financial Well-Being Index, a survey conducted by the Trinidad and Tobago Unit Trust Corporation.

Last July, the UTC commissioned Caribbean Market Research (CMR) to determine the financial well-being of citizens of Trinidad and Tobago. From July 5 – 30, 1,000 people from all over the country aged 18 and older, of varying socio-economic backgrounds, were interviewed by CMR to measure citizens' attitudes and behaviour that lead to financial health.

It should be noted the survey took place before the State of Emergency (which began August 22) took place.

Despite the apparent contentment, the survey showed citizens divided into four distinct financial groupings: the savvy (15 per cent); the striving (26 per cent); the struggling (15 per cent); and the slow (44 per cent).

While these four segments differ by household income, it is really their attitudes towards finances and the actions they have taken to plan for the future that distinguish them.

The financially savvy, the survey revealed, are the most likely to feel informed when it comes to making financial decisions. They also expect their financial positions to keep improving and feel they have stronger control over their spending. They do the most to ensure their financial well-being—from paying down debt to making investments and saving money. They are also the most trusting of financial planners. This segment is the most likely to define financial well-being as being able to buy whatever, whenever. They are also most likely to be saving for retire-ment.

The financially striving are similar in their attitudes and behaviours to the savvies, but are set apart by their entrepreneurial spirit. Their goals tend to be aimed at higher education or investing in a business. They are twice as likely as the savvies and the struggling to consider their financial literacy worse than their family or friends, from whom they are more likely to trust for financial advice. Strivers seem to acknowledge that they need a better understanding of finance in order to reach their financial goals.

Financial strugglers are most likely to be low middle-income to low income, but also the most likely to report they do not know what their monthly income is. They tend to view financial well being as having enough to cover basic expenses. When they do manage to save, it is primarily for an emergency fund. The vast majority of those surveyed (85 per cent) said they never met or do not plan to meet a financial planner; pay off debt each month, or transfer money automatically to savings. Although they may seem disengaged from achieving financial well being, they are more likely to trust financial institutions.

The financially slow are collectively the largest grouping of the population. They tend to be unskilled men with low income jobs, living in small households. More Tobago respondents fall into this category than any other. Like the struggling, they tend to view financial well being as being able to cover basic expenses. Despite spending more than they earn, their focus on saving is more likely to be for home improvements and Christmas. They consider their financial literacy worse than their friends and family, compared to the other three segments. While members of this group are more satisfied with their lives overall than strivers and struggles, they are not nearly as satisfied as the savvies.

For many citizens, financial well-being appears to be more about purchasing than saving. More than half the participants (55 per cent) defined financial well-being as being able to buy anything with no worries. Only 16 per cent defined it as having enough money to make investments.

This would be reflected in the spending/saving habits of those surveyed. While 39 per cent spend as much as they earn or more and do not save money, only 24 per cent spend less than they earn and regularly save money.

However, 79 per cent of respondents said they saved if they had a specific goal in mind, although only four per cent were saving with a mind to pay down debt.

The survey showed that while 88 per cent saw investments and savings as the top activity to secure a sound financial future, only 24 per cent have ever met with a financial planner. Eighty-seven per cent, however, believe banks and other financial institutions need to offer courses to the general public on saving money.

The survey concluded by reiterating that financial wellbeing is not equal to financial comfort. The more engaged an individual is with his or her household finances, the survey finds, the more likely he or she will report have a positive feeling about his or her finances. These findings suggest that perceptions of financial comfort are not necessarily the clearest sign of financial wellbeing. Financial institutions may need to educate people as to the realities of financial responsibilities today. Financial consultants, the survey advises, risk alienating potential clients if they confuse wellbeing with comfort.