Personal Finance for social need

Say the words ‘personal finance’ to most people and it’s likely their eyes will glaze over with images of savings books, mortgage statements and piggy banks. For my part, ISAs – Individual Savings Accounts – are what springs to mind.

But, recasting that acronym perhaps offers some insight into the principles which could guide a shift in the way people navigate the world of personal finance.

What if we looked again at the ‘ISA’?:

– ‘I’ comes to mean Individual control and autonomy. The lesson here is that people need to be able to manage their finances according to their own circumstances: they should be in charge. The way financial support is offered to people, if required, should reflect this. For example, where possible, people should be offered cash rather than vouchers; best practice from our international development work suggests income rather than hand outs boosts local economies, and empowers people to make their own choices. Yet, in the UK the recent dramatic rise of foodbanks suggests we are heading in the opposite direction as people’s income through work and benefits is proving insufficient and instead they are turning to (life saving) food parcels.

– ‘S’ is for Sufficiency. The Oxfam Humankind Index for Scotland – a measure of Scotland’s performance across a range of issues derived from public consultation – tells us that people do not seek extreme levels of wealth. Instead they want enough money to live in their community with dignity and they want to know funds will be forthcoming when they need it. Sadly it seems the erosion of the social safety net and the growing numbers of ‘precariat’ workers on zero hour contracts are undermining these very natural objectives.

– And A is for Accessible to All. This means everyone needs to be included – not just those ‘striving’ in paid work and those deemed to have ‘contributed’ in a narrow sense, excluding those who contribute through unpaid work or caring, for example. This requires ensuring a basic level of support. For all. On this, increasing discussion of concepts such as Citizens’ Income might just take us in the right direction.

Delivering Individualised, Sufficient, Accessible personal finance clearly demands action across a range of areas – including a labour market which provides decent work that pays enough. We need appropriate financial instruments that help people plan and smooth their incomes over time. State mechanisms are crucial in providing support in difficult times – to which we are all vulnerable.

Ultimately, we need greater equality, preventing problems at their root causes, tackling poverty at its sources rather than simply treating the symptoms with increasingly threadbare sticking plasters.

And if we are really serious about this – about creating healthier societies, supportive labour markets and cohesive, strong communities – we need longer term time frames in all our decision making. That means the decision making of businesses; of government departments and politicians; and even civil society organisations.

Rather than just encompassing savings books, mortgage statements and piggy banks, rethinking Personal Finance can help us reclaim the economy so it serves people’s needs, rather than the other way around.