Financial practices of our diarists
19 September 2019
Canadians with low and modest incomes follow a number of strategies to make their finances work. We identified a number of financial practices that some of our nearly 30 diarists habitually follow. You can read about them in this report.
How did we undertake phase 1 of the diaries project?
We are almost completed phase 1 of the Canadian Financial Diaries Research Project. We are beginning to work with the data and we have compiled a summary of the process of research so far. It is documented in the report available here.
This report provides an overview of the qualitative and quantitative methods employed in the first phase of the Canadian Financial Diaries project. As such it provides an overview of distinct research phases, recruitment, participants, retention and attrition, interviews and data collection. Also included are analyses and recommendations on recruitment, attrition, compensation, interview locations, meeting times, survey instruments, and data cleaning.
The goals for this initial report are multifold: report on the methods that the FD field team employed during the first 1.5 years of fieldwork, analyze the success and failure of methods to accomplish the aims of this project and lastly to brainstorm and consider issues for an academic article. With three significant and at times contradictory aims, this report is a draft and removing/altering sections for the varied audiences will need to occur.
Report on Income Tax Return Module of the Canadian Financial Diaries
The Canadian Financial Diaries seeks to understand the financial dynamics of low and moderate-income Canadians. Meeting with participants weekly for one year to monitor and record their financial diaries during Phase I of this project, this mixed methodology research reveals many layers of financial decision-making. In this report, we assess participants’ ideas on their understanding and use of tax returns.
We asked Financial Diaries participants to talk about preparing their tax return and their understanding of the Notice of Assessment (NOA). We wanted to know how participants filed their taxes and their experiences completing tax returns and receiving a refund (if applicable). This module was created by the field research team in consultation with Jennifer Robson of the academic team.
This qualitative survey identified that participants currently use two methods for filing taxes: a free CRA-approved web-based platform and free services offered offered through the Community Financial Counselling Services called the Community Volunteer Income Tax Program at the Norquay Building. Participants were generally pleased with the service they received from the volunteer program and with the time period in which they receive a return. In terms of the NOA, participants had varied levels of understanding, some confusion and minimal frustration in understanding this document.
Regulatory scan on diaries related research drafted
New report, Regulatory Scan Working Draft, from CFD team member Dr. Gail Henderson, Kevin Akrong, and Diane Wu, scans Canadian federal and provincial regulations that contribute to or constrain financial empowerment.
Summary of the report
There are many financial products and services aimed at moderate- and low-income Canadians – payday loans, prepaid credit cards, instalment loans, tax rebate discounters – with distinct regulations applying to each, regulations which are enforced by different agencies operating at different levels of government. This can make navigating the financial marketplace difficult for any financial consumer. This report is an ongoing attempt to summarize the regulators and regulations relevant to the financial lives of low-income Canadians. These are mainly concerned with protecting consumers from the worst predatory practices, but also include trying to improve low-income Canadians’ access to low-cost financial goods and services. The report also briefly describes the regulatory structure in other jurisdictions and explores possible solutions for improving the financial lives of low-income households.
Presentation on diaries process
Jerry Buckland gave a presentation “Income volatility literature & early qualitative-quantitative insights” on the diaries process at the Canadian Economics Association meeting in Banff, Canada, 31 May 2019.
Some diary participants are significant savers
By Jodi Dueck-Read
12 December 2018
Jenny’s (not her real name) first lessons about personal finances came from her dad who was working in a profession. She opened a bank account at five years old. Today in her late 40’s, Jenny has amassed savings of $46,000 in an RESP for her teenage son. Jenny has saved this amount with limited income as a recipient of social assistance (Employment and Income Assistance). She has completed financial literacy workshops and matched savings programs and saves money determinedly. Most months 90% of her child tax benefit goes directly to her son’s RESP.
Jenny is trying to pass on her financial literacy skills to her son and teaches him an ‘envelope method’ for tracking spending. When he turns 18 and is no longer in school, he will be required to pay rent to live with his mother. Learning from his mom’s savings patterns may be his path to success.
(Jenny is a pseudonym).