Financial health is about more than just income

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financial-literacy

(Julie McFayden) #1

While having more income certainly helps us achieve financial well-being, income alone is not the only driver of financial health. We need to be balancing our income with expenses, setting money aside for savings and emergencies, minimizing how much money we borrow, and investing for the future in things like education and housing.

For a long time, income has been viewed as the primary indicator of financial health, however income tells us only part of the story.

To mark the launch of Financial Literacy Month (#FLM2018), Prosper Canada and the Canadian Council on Social Development (CCSD) released the Neighbourhood Financial Health Index (NFHI), a powerful new tool for measuring, visualizing and exploring the distribution and underlying drivers of financial health and vulnerability in local communities.

Accessible at www.nfhi.ca, the NFHI can tell us at a glance how households are doing financially on average in individual neighbourhoods and communities – information that has never been freely available before.

Going beyond income data alone, the NFHI combines six indicators – household income, liquid assets, real estate assets, mortgage debt, consumer debt and neighbourhood poverty – to provide a more comprehensive and accurate picture of household financial health at the neighbourhood level.

The NFHI is accompanied by the interactive, online NFHI Community Financial Health Maps that enable users to see at a glance how financial health and vulnerability are distributed within specific communities and to explore the underlying drivers of financial health and vulnerability in individual neighbourhoods.

This new information equips communities to better identify areas that need help and to target the right financial help and supports to where they are needed most. Constructed from Environics Analytics’ WealthScapes data, the new Index and mapping tool were developed to:

  • Measure and analyze household financial health within and across communities
  • Catalyze an informed dialogue about household financial health and vulnerability in Canada
  • Inform more effective policies, programs and services to reduce financial vulnerability.

We hope that municipalities, community organizations, and residents use the NFHI and Community Financial Health Maps to explore the geographic distribution and underlying drivers of financial health and vulnerability in order to target supports where they’re needed most.

Learn more about the NFHI:

NFHI backgrounder

Cross Canada check-up: Provincial/Territorial findings from Canada’s Neighbourhood Financial Health Index

Toronto Community Profile

Neighbourhood Financial Health Index: Final project report