Assessing the Levels of Financial capability and Well-Being in Norway. Økonomisk dugelighet og trygghet i Norge. Elaine Kempson & Christian Poppe

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1 Prject reprt n Elaine Kempsn & Christian Pppe Assessing the Levels f Financial capability and Well-Being in Nrway A summary reprt Øknmisk dugelighet g trygghet i Nrge Hvedfunn

2 CONSUMPTION RESEARCH NORWAY - SIFO Missin reprt n CONSUMPTION RESEARCH NORWAY - SIFO OslMet Osl Metrplitan University Stensberggt. 26. PO BOX 4, St. Olavs plass, NO-0130 Osl, NORWAY Due t cpyright restrictins, this reprt is nt t be cpied frm r distributed fr any purpse withut a special agreement with SIFO. Reprts made available n the site are fr persnal use nly. Cpyright infringement will lead t a claim fr cmpensatin.

3 Assessing the Levels f Financial Capability and Financial Well-being in Nrway A summary Reprt Øknmisk dugelighet g trygghet i Nrge Hvedfunn Elaine Kempsn Visiting Prfessr at Cnsumptin Research Nrway (SIFO) Osl Metrplitan University Christian Pppe Senir Researcher/Phd at Cnsumptin Research Nrway (SIFO) Osl Metrplitan University

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5 Prject reprt n Tittel Øknmisk dugelighet g trygghet i Nrge. Hvedfunn Title Assessing the Levels f Financial Capability and Financial Well-being in Nrway. A Summary Reprt Frfatter(e) Elaine Kempsn & Christian Pppe Antall sider ISBN Prsjektnummer Dat ISSN Faglig ansvarlig sign. Oppdragsgiver Cnsumptin Research Nrway (SIFO) Sammendrag Denne rapprten handler m financial well-being øknmisk trygghet på nrsk. Rapprten gir et versiktsbilde av øknmisk trygghet i Nrge i 2017, basert på en tidligere rapprt: Kempsn E, Pppe C. SIFO rapprt Understanding Financial Well-Being and Capability. A Revised Mdel and Cmprehensive Analysis. Osl: Cnsumptin Research Nrway (SIFO), Osl Metrplitan University. Analysene viser at øknmisk trygghet påvirkes direkte av tre grupper av variabler: måten man bruker penger på, grad av øknmisk kntrll, g egenskaper ved det ssiale miljøet. Resultatene sammenlignes gså med andre land, g plasserer Nrge sm en kntekst med utpreget høy grad av generell øknmisk trygghet. Rapprten peker likevel på kritiske aspekter av nrske hushldningers øknmiske atferd, herunder lav grad av kntrllert frbruk, g gir anbefalinger fr å knslidere g frbedre allerede høye nivåer av øknmisk trygghet. Summary This reprt prvides an verview f financial well-being in Nrway in 2017, based n a previus reprt: Kempsn E, Pppe C. SIFO Reprt Understanding Financial Well-Being and Capability. A Revised Mdel and Cmprehensive Analysis. Osl: Cnsumptin Research Nrway (SIFO), Osl Metrplitan University. The analysis shw that financial well-being is directly influenced by three grups f variables: mney use behaviurs, financial cnfidence and cntrl, and aspects f peple s scial envirnment. The results are als cmpared with ther cuntries, placing Nrway as a high-scre cntext. Still, the reprt pints at critical aspects f the financial behaviur f Nrwegian husehlds, including a relatively lw scre n spending restraint, and ffers plicy advice t cnslidate and imprve already high levels f general financial well-being. Stikkrd Øknmisk utsatthet, øknmisk trygghet, øknmisk dugelighet, øknmisk atferd

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7 Innhld Acknwledgements... 7 Øknmisk trygghet i Nrge... 9 Overview f Financial Well-being in Nrway The Imprtance f Financial Well-being and Financial Capability Financial Well-being in Nrway Segmenting the Nrwegian ppulatin Detailed measures f financial well-being Types f peple with the lwest financial well-being scres Factrs that Prmte Higher Levels f Financial well-being Factrs that Prmte Financial Capability Implicatins fr Plicy and Practice Prmting financial well-being Develping a natinal strategy References Abut the research Identifying the key cmpnents f financial well-being, capability and literacy Identifying the determinants f financial well-being and capability... 41

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9 Acknwledgements Cnsumptin Nrway (SIFO) and the authrs wuld like t thank Kantar TNS Gallup Nrway wh undertk the survey fr the high quality f the data that they cllected. We are als very grateful t the respndents t the survey fr their hnesty abut hw they manage their mney. Last, but certainly nt least, we wuld like t thank Andrea Finney fr her valuable and rigrus input t the early stages f the analysis. The quality check f the reprt was dne by Anita Brch, Head f Research SIFO. Cnsumptin Research Nrway SIFO OslMet Osl Metrplitan University Osl, 15. December 2018

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11 Øknmisk trygghet i Nrge Sammenlignet med andre land skårer Nrge høyt på generell øknmisk trygghet. Men når det gjelder øknmiske buffere er handlingsrmmet mindre enn fr håndtering av daglige utgifter. Dette skyldes både inntektsfrhld g flks frbruks-, spare- g låneadferd atferdsmønstre sm primært henger sammen med persnlighetstrekk. Øknmisk kunnskap er mye mindre viktig. Dette peker i retning av at det må rettes et større fkus på nrdmenns øknmiske dugelighet fr å sikre at de i tiden sm kmmer kan ta tilstrekkelig ansvar fr egen øknmi. På det generelle målet fr øknmisk trygghet skårer Nrge i gjennmsnitt 77 peng (på en skala fra null til 100). Dette er betydelig høyere enn i Canada (65), Irland (64), Australia g New Zealand (begge 59). Fr en str del kan dette tilskrives høyere inntekt g lavere inntektsfrskjeller i Nrge. På et av de tre underliggende dimensjnene av øknmisk trygghet verhlde løpende øknmiske frpliktelser skårer Nrge svært høyt: 90 peng. Dette målet fanger det å ha tilstrekkelig med penger til mat g evnen til å betale regninger g andre utgifter til rett tid. I mtsetning til dette var gjennmsnittlig pengskåre fr den andre underliggende dimensjnen øknmisk armslag betydelig lavere: 70. Dette målet fanger pp grad av øknmisk valgfrihet i hverdagen. Resultatet viser at et større antall mennesker ikke hadde mye handlingsrm utver å dekke løpende utgifter. På den tredje g mer langsiktige underliggende dimensjnen fr trygghet øknmisk rbusthet skårer Nrge i gjennmsnitt 73 på skalaen fra Resultatet tyder på at mens en større del av den nrske beflkningen er rimelig gdt beskyttet mt øknmiske prblemer, fins det gså en mindre andel sm er utsatt frdi de ikke har en tilstrekkelig øknmisk buffer. Disse gjennmsnittene skjuler imidlertid gså signifikante frskjeller på tvers av den nrske beflkningen. Over halvparten (57 prsent) synes å være øknmisk trygge g skårer i gjennmsnitt hele 91 peng på det generelle trygghetsmålet. Både deres nåværende øknmiske situasjn g beskyttelsen mt uheldige begivenheter i framtiden er gd. En tredjedel (34 prsent) har det bra med en gjennmsnittlig skåre på 68 på det generelle trygghetsmålet. Men selv m de er i stand til å verhlde sine øknmiske frpliktelser har de mye lavere bufre enn de øknmisk trygge. Flk sm klarer seg akkurat utgjør 6 prsent av den nrske beflkningen. De har en gjennmsnittlig generell øknmisk trygghetsskåre på bare 42 peng. Mange har øknmiske prblemer mens andre lever på grensen av å kmme i vanskeligheter. De har få øknmiske bufre mt fremtidige endringer i rammebetingelsene.

12 10 Well-being in Nrway - summary reprt Omtrent 3 prsent av den nrske beflkningen sliter øknmisk. De har en gjennmsnittlig generell øknmisk trygghetsskåre på bare 19 peng, g gså svær lave nivåer på samtlige av de tre underdimensjnene av øknmisk trygghet. Med andre rd er de allerede i øknmiske vanskeligheter, g har utilstrekkelige eller ingen bufre å trekke på verfr mulige inntektsreduksjner- eller utgiftsøkninger. Den øknmiske tryggheten påvirkes av en kmbinasjn av inntekt, hvrdan flk bruker g administrerer pengene de har, g eventuelle erfaringer med inntektsnedgang. Grad av øknmisk kunnskap spiller en mindre rlle. Gd plitikk er nødvendig, ikke bare fr å sikre stabilitet i hushldenes inntektssituasjn, men gså fr å fremme øknmisk kmpetent atferd. De viktigste handlingstypene sm driver øknmisk trygghet er knyttet til hvrdan flk bruker pengene sine: aktiv sparing, ikke låne til daglige utgifter, begrenset bruk av frbrukskreditt g kntrllert frbruk. Øknmisk tillit g ansvar fr egne øknmiske handlinger påvirker gså den øknmiske tryggheten. Hvrdan flk styrer pengene sine (gjennm budsjettering g vervåkning av inntekter g utgifter, fr eksempel) er imidlertid mindre viktig. Selv m det er rm fr frbedring, skårer Nrge høyt når det gjelder handlingstyper sm påvirker den øknmiske tryggheten. Unntaket er (mangel på) kntrllert frbruk, hvr gjennmsnittsskåren er lavere enn i de fleste andre land. Hvis man skal gjøre ne med dette, må det fkuseres mer på flks hldninger til å spare, bruke g låne penger, samt rette ppmerksmheten mt en rekke avgjørende persnlighetstrekk. Eventuelle tiltak sm tar sikte på å øke graden av øknmisk kunnskap g erfaring i den vksne beflkningen er trlig mindre viktig i denne sammenheng. Det å øke nivået på øknmisk trygghet g fremme gd atferd er en kmpleks prsess sm ptensielt invlverer mange aktører. Sklene har tydeligvis en viktig rlle å spille verfr barn g unge, g det samme gjelder rganisasjner sm NAV g frbrukerrganisasjnene. Men gså banker g andre finansinstitusjner har et klart ansvar. Regjeringene i andre land, sm f.eks. Strbritannia, USA, Canada, New Zealand g Australia har etablert spesifikke rganisasjner fr å krdinere arbeidet på dette mrådet. Disse er en integrert del av det institusjnelle systemet g gjerne direkte underlagt et departement. Den nrske regjeringen bør vurdere en tilsvarende rdning. Disse rganene jbber vanligvis med en rekke interessenter fr å utvikle en nasjnal strategi fr å øke nivået på øknmisk atferd g trygghet. De fretar undersøkelser fr å identifisere pririteringsmrådene fr intervensjner, identifiserer g fremmer beste praksis når det gjelder øknmiske tjenester, samt identifiserer hull i gjeldende reguleringer. Den freliggende analysen av øknmisk trygghet gir grunnlag fr å utvikle en nasjnal strategi av denne typen i Nrge.

13 Øknmisk trygghet i Nrge 11 De trygge Over halvparten (57 prsent) synes å være øknmisk trygge g skårer i gjennmsnitt hele 91 peng på det generelle trygghetsmålet. Både deres nåværende øknmiske situasjn g beskyttelsen mt uheldige begivenheter i framtiden er gd. Denne gruppen viser ingen tegn på å ikke kunne ppfylle løpende øknmiske frpliktelser (gjennmsnittlig scre 99). Nesten alle (98 prsent) sier at de ikke har prblemer med å betale regninger g andre utgifter til rett tid, g resten sier at det skjer sjelden. De gjør det gså bra med hensyn til øknmisk armslag (gjennmsnittlig scre 82). De fleste har penger til vers ved månedsslutt g har nk penger til å nyte livet g gjøre de tingene de ønsker. Nivået på øknmisk rbusthet er gså høyt (gjennmsnittlig scre 91). Fire av ti (40 prsent) har ppsparte midler tilsvarende mer enn 12 månedslønner, g en fjerdedel (23 prsent) har spart mellm seks g tlv månedslønner. Hvem er de? Dette er den eldste av de fire gruppene med en gjennmsnittsalder på 52 ti år eldre enn de andre gruppene. De er gså den mest velstående gruppen, med brutt husstandsinntekter på i gjennmsnitt 828,403 krner i året. Og de er gruppen med lavest sannsynlighet fr å ha pplevd enten et betydelig inntektsfall eller en betydelig utgiftsøkning de siste 12 månedene. Alle kategrier med særlig risik fr lav grad av øknmisk trygghet er sterkt underrepresentert i gruppen av øknmisk trygge. Dette inkluderer arbeidsløse, selvstendig næringsdrivende g leietakere (se figurene 3-6). De har gså høyest utdanning. Det stre flertallet har minst videregående sklegang, g 36 prsent har en universitetsgrad. Øknmisk dugelighet De trygge skåret høyest på øknmisk dugelighet. De er svært aktive sparere, med en gjennmsnittlig scre på 82 av 100, g nesten ingen låner fr å betale regninger eller møte daglige behv (pengsum 97). Sammenlignet med andre grupper har de høyere grad av kntrllert frbruk (78), selv m deres høyere inntekter innebærer at de har mindre behv fr dette. De begrenser gså bruk av frbrukslån mer enn andre grupper med en scre på hele 95. De er ganske sikre på deres evner til å styre penger (75) g påtar seg ganske høy grad av persnlig ansvar fr sine øknmiske beslutninger (73). Omtrent halvparten av dem (52 prsent) sier at freldrene deres har diskutert penger med dem sm barn. Mulige tiltak Denne gruppen vil ikke være priritert når det gjelder tiltak fr å øke den øknmiske dugeligheten i Nrge.

14 12 Well-being in Nrway - summary reprt Har det bra, men med få reserver En tredjedel (34 prsent) har det bra med en gjennmsnittlig skåre på 68 på det generelle trygghetsmålet. Men selv m de er i stand til å verhlde sine øknmiske frpliktelser har de lavere bufre enn de øknmisk trygge. Denne gruppen gjør det ganske bra når det gjelder håndtering av øknmiske frpliktelser, med en gjennmsnittlig scre på 87. Likevel sa tre av ti (31 prsent) at de nen ganger sliter med å betale regninger g andre frpliktelser til rett tid. Nen av dem har imidlertid ganske begrenset armslag i sine budsjetter, med en gjennmsnittlig scre på 58. Faktisk sa bare seks av ti (60 prsent) at deres øknmi gir dem nk valgfrihet til å anskaffe det de ønsker g nyte livet. Deres relative mangel på øknmiske bufre betyr at de er ptensielt utsatt fr øknmisk risik (deres gjennmsnittscre på øknmisk rbusthet var 58). Nesten t tredjedeler av dem (64 prsent) hadde mindre enn tre måneders inntekt ppspart. Hvem er de? Med en gjennmsnittsalder på 43 er de en gd del yngre enn de sm tilhører gruppen øknmisk trygge. De har mderat høye (brutt) husstandsinntekter på i gjennmsnitt krner i året. Relativt få av dem har pplevd betydelig nedgang i inntekt eller betydelig økning i utgiftene de siste 12 månedene. Denne gruppen mfatter heller ikke mange arbeidsledige g selvstendig næringsdrivende (figur 3-5). Andelen leietakere er høyere enn blant de trygge, men samtidig lavere enn i de t andre gruppene. (Figur 6). Øknmisk dugelighet Denne gruppen har ganske høy grad av øknmisk dugelighet, selv m den er lavere enn blant de trygge. De er ganske aktive sparere, med en gjennmsnittlig pengsum på 68, g nesten ingen av dem lånt fr å betale regninger eller møte daglige utgifter (peng 91). Imidlertid har de en høyere tilbøyelighet til frbruk enn de trygge, g skårer i gjennmsnitt bare 64 peng på indikatren fr kntrllert frbruk. Nivået på begrenset bruk av frbrukskreditt er gså lavere enn blant de trygge, men frtsatt svært høyt (87). De er ganske trygge på deres evner til å styre penger (66) g tar en mderat grad av persnlig ansvar fr sine øknmiske beslutninger (68). Omtrent halvparten av dem (49 prsent) sier at freldrene deres diskuterte penger med dem sm barn. Mulige tiltak Bruk av ssiale markedsførings- g edutainment-teknikker fr å fremme aktiv sparing g kntrllert frbruk. Hjelp-til-selvhjelp-tiltak, f.eks. på internett.

15 Øknmisk trygghet i Nrge 13 Klarer seg akkurat Flk sm klarer seg akkurat utgjør 6 prsent av den nrske beflkningen. De har en gjennmsnittlig generell øknmisk trygghetsskåre på bare 42 peng. Mange har øknmiske prblemer mens andre lever på grensen av å kmme i vanskeligheter. Denne gruppen vil være et mål fr tiltak fr å avverge øknmiske vanskeligheter, samt å bygge reserver fr å kunne møte fremtidige behv. Selv m de hadde en gjennmsnittlig scre på 61 fr å møte løpende øknmiske frpliktelser, sier én av ti (9 prsent) at det er en knstant kamp fr å betale regninger til rett tid, g syv av ti (72 prsent) sier at de sliter av g til. Nesten fire av ti (37 prsent) sier at de kmmer på etterskudd med betalinger fra tid til annen, g 8 prsent innrømmer at det skjer regelmessig. De har lite øknmisk armslag i hverdagen g scret bare 37 på dette målet. Og åtte av ti (80 prsent) sier at øknmien ikke tillater dem å gjøre de tingene de ønsker fr å kunne nyte livet. Dessuten har de svært lite penger lagt til side fr å dekke dem mt fall i inntekt eller økte utgifter. Her skårer de i gjennmsnitt så lavt sm 28 peng. Tre fjerdedeler av dem (75 prsent) har mindre enn én månedsinntekt i sparepenger. Hvem er de? De sm klarer seg akkurat har en brutt årsinntekt på i gjennmsnitt krner. Dette er under gjennmsnittet fr hushld i beflkningen sett under ett. Ca. en tredjedel har pplevd en betydelig nedgang i inntektene de siste 12 månedene, mens en femtedel har fått en vesentlig økning i utgiftene i samme peride (se figur 3 g 4). 7 prsent er arbeidsløse mer enn det dbbelte av nasjnalt gjennmsnitt (se figur 5). 43 er leietakere g svært få av dem (5 prsent) er bligeiere (se figur 6). Øknmisk dugelighet De sm klarer seg akkurat har mye lavere nivåer av øknmisk dugelighet enn de t fregående gruppene. De hadde lav scre fr aktiv sparing (50 av 100). Og selv m de fleste unngikk lånepptak fr å betale regninger eller møte daglige behv (peng 78), sliter en minritet av dem med nettpp dette. De har en relativt lav scre på kntrllert frbruk (57). Nivået på begrenset bruk av frbrukskreditt var høyere (71). De var ikke særlig trygge på evnen til å styre penger (54) g tk en mderat grad av persnlig ansvar fr sine øknmiske beslutninger (62). Bare fire av ti (41 prsent) sier at freldrene deres diskuterte penger med dem sm barn. Mulige tiltak Persnlig caching g rådgivning gjennm NAV/selvhjelpsmateriell fr å fremme sparing g unngå lån til daglige utgifter fr å bedre evnen til å møte øknmiske utfrdringer i fremtiden g å fremme større ansvar fr egne øknmiske beslutninger.

16 14 Well-being in Nrway - summary reprt Sliterne Omtrent 3 prsent av den nrske beflkningen sliter øknmisk. De har en gjennmsnittlig generell øknmisk trygghetsskåre på bare 19 peng, g gså svært lave nivåer på samtlige av de tre underdimensjnene av øknmisk trygghet. Mange er allerede I øknmiske vansker g har antakelig behv fr veiledning g assistanse fra NAVs øknmiske rådgivere. Sliterne skårer bare 34 på verhldelse av øknmiske frpliktelser, ne sm indikerer at de fleste har øknmiske prblemer. Faktisk sier fire av ti (41 prsent) at det er en knstant kamp fr å betale regninger g andre frpliktelser til rett tid, g resten innrømmer å slite fra tid til annen. Omtrent halvparten (51 prsent) sier at de regelmessig kmmer på etterskudd med regninger g andre frpliktelser, g ytterligere en tredjedel (35 prsent) innrømmer at dette er tilfellet fra tid til annen. De hadde nesten ikke ne slakk i budsjettet, ne sm tydelig illustreres av deres gjennmsnittlige pengsum på 17 på målet fr øknmisk armslag. Faktisk sier nesten samtlige (98 prsent) at deres øknmi ikke tillater dem å gjøre det de ønsker g nyte livet. Med en gjennmsnittlig pengsum på bare 8 på målet fr øknmiske bufre (rbusthet), har de i praksis ingen beskyttelse mt fremtidige øknmiske begivenheter. Nesten alle (98 prsent) har mindre enn én månedsinntekt i sparepenger. Hvem er de? Dette er uten tvil den mest utsatte av de fire gruppene. Deres årlige inntekter er mindre enn halvparten av de øknmisk trygge krner mt krner. Det var fem ganger mer sannsynlig at de hadde hatt et betydelig inntektsfall i løpet av det siste året g tre ganger mer sannsynlig at de hadde vært utsatt fr en større økning i utgiftene (se figur 3 g 4). 15 prsent i denne gruppen er arbeidsløse g ytterligere 8 prsent er selvstendig næringsdrivende. Begge andeler er høyest av alle fire grupper (figur 5). Mer enn halvparten er leietakere (se figur 6). Øknmisk dugelighet Av de fire gruppene skårer sliterne lavest på øknmisk dugelighet. På aktiv sparing skårer de bare 39, men dette kan vel så mye skyldes lave inntekter sm mangel på tilbøyelighet til å spare. Selv m de har en høyere pengsum på målet fr ikke å låne til daglig frbruk (73) er dette likevel lavest av de fire gruppene. De skårer 57 peng på målet fr kntrllert frbruk. Dette er det samme sm de sm klarer seg akkurat. Nivået på begrenset bruk av frbrukskreditt var gså ganske lik (74). De skårer lavt på grad av tillit til egen evne til å styre penger (40). På målet fr ansvar fr egne øknmiske beslutninger skårer de 59 av 100 peng. Bare tre av ti sier at freldrene diskuterte penger med dem sm barn. Dette er lavest av alle fire grupper. Mulige tiltak Persnlig caching g rådgivning i NAV fr å fremme sparing g unngå lån til daglige utgifter, g fr å bygge pp øknmiske bufre g ppmuntre til større ansvar fr egne øknmiske beslutninger.

17 Overview f Financial Well-being in Nrway Cmpared with their cunterparts in ther cuntries, Nrwegian peple were ding quite well in terms f general financial well-being. But levels f financial resilience fr the future were smewhat lwer than they were fr meeting day-t-day cmmitments. This was attributable t peple s spending, saving and brrwing behaviurs, as well as the incme they had. And these behaviurs were driven primarily by persnality traits; knwledge, hwever, was much less imprtant. This indicates a need t ensure that the Nrwegian ppulatin has the financial capability needed fr their grwing respnsibility fr their wn financial well-being. The Nrwegian ppulatin had average scre fr the general financial well-being measure f 77 (n a scale frm zer t 100). This is cnsiderably higher than in Canada (65), Ireland (64) Australia r New Zealand (each 59). In large part this can be attributed t the higher incmes and lwer incme inequality in Nrway. The average scre was very high (90) fr the meeting current cmmitments sub-measure f financial well-being, which captures the inability t pay bills and ther cmmitments n time and having insufficient mney fr fd and ther expenses. In cntrast, the average scre fr being and feeling cmfrtable financially was cnsiderably lwer, at 70, shwing that a larger number f peple did nt have much mney left ver after paying fr essentials t allw them t d the things they want r enjy. The lnger-term sub-measure f financial resilience fr the future average scre was 73, indicating that, althugh mst f the Nrwegian ppulatin has fairly gd prvisin against financial shcks, a minrity are expsed. But these averages hide sme significant differences acrss the ppulatin f Nrway. Well ver half (57 per cent) f the ppulatin appeared t be financially secure with an average scre f 91 n the general measure f financial well-being. Bth their current financial situatin and their prvisin fr the future were strng. A third (34 per cent) f the ppulatin seemed t be ding OK, with an average general financial well-being scre f 68. But althugh they were, n the whle, keeping up with current cmmitments they had much lwer levels f financial resilience fr the future than the peple wh were financially secure. Peple wh were just getting by accunted fr 6 per cent f the Nrwegian ppulatin. They had an average general financial well-being scre f just 42. These peple appeared t be at risk f falling int financial difficulties currently as well as having little financial resilience fr the future. Abut 3 per cent f the Nrwegian ppulatin were clearly struggling financially. They had an average general financial well-being scre f nly 19 and very lw scres acrss all f the mre detailed measures, bth shrt and lng term. In ther wrds, they were in financial difficulty nw, and had inadequate r n reserves t prtect them against pssible incme r expenditure shcks.

18 16 Well-being in Nrway - summary reprt The financial well-being f individuals was influenced by a cmbinatin f their incmes and experience f incme shcks and hw they use and manage the mney they have available t them. Knwledge did nt play a majr rle. S, plicies are needed nt nly fr incme security but als t prmte financially capable behaviurs. The cre behaviurs that drive financial well-being relate t hw peple use their mney: active saving, nt brrwing fr daily expenses, restrained cnsumer credit use and spending restraint. Financial cnfidence and taking respnsibility fr ne s financial actins and utcmes als affect financial well-being. Hw peple manage their mney (thrugh budgeting and mnitring incme and expenditure, fr example) is much less imprtant. Even thugh there is scpe fr imprvement, cmpared with ther cuntries the Nrwegian ppulatin des quite well n the cre behaviurs that were fund t drive financial well-being. The exceptin is (lack f) spending restraint, where the average scre is lwer than in mst ther cuntries. Prmting imprvement in all the cre behaviurs will mean addressing attitudes t saving, spending and brrwing as well as an array f persnality traits. Knwledge and experience seem less imprtant. Raising levels f financial well-being and prmting capable behaviurs is a cmplex prcess, ptentially invlving many actrs. Schls clearly have an imprtant part t play especially fr children f yung age, as d rganisatins such as NAV and cnsumer rganisatins. But s, t, d banks and ther financial institutins. Gvernments in ther cuntries, such as the United Kingdm, the United States, Canada, New Zealand and Australia have nminated a bdy t c-rdinate wrk in this area, which is generally either part f the regulatry framewrk r directly accuntable t gvernment. The Nrwegian gvernment may wish t cnsider fllwing their example. These bdies typically wrk with a range f stakehlders t develp a natinal strategy t raise levels f financial capability and well-being. They undertake surveys t identify the pririty areas fr interventins, identify and prmte best practice in terms f service delivery as well as identifying gaps in prvisin that need t be filled. The financial well-being survey, therefre, prvides the bedrck fr develping a natinal strategy f this kind in Nrway.

19 Overview f Financial Well-being in Nrway 17 Secure Representing ver half (57 per cent) f the Nrwegian ppulatin, peple wh were financially secure had an average scre f 91 n the general measure f financial well-being. Bth their current financial situatin and their prvisin fr the future were strng. These peple were shwing n signs f being unable t meet their financial cmmitments (average scre 99). Almst all f them (98 per cent) said that they faced n difficulty paying bills and ther cmmitments n time and the rest said that it seldm happened They were als ding well in terms f bth being financially cmfrtable (average scre 82), with mney left ver mst mnths and had sufficient mney t d the things they wanted and t enjy life. Their financial resilience fr the future was als high (average scre 91). Fur in ten (40 per cent) f them had the equivalent f mre than 12 mnths incme in savings and a further quarter (23 per cent) had between six- and 12-mnth s incme saved. Wh they are They were the ldest f the fur grups with a mean age f 52 ten years lder than ther grups. They were the mst affluent, with grss husehld incmes averaging NOK a year. And they were the grup least likely t have experienced either a substantial incme fall, r a substantial expenditure increase in the past 12 mnths. All the types f peple wh were at particular risk f lw financial well-being were greatly under-represented amng peple wh were financially secure. This included unemplyed peple, peple wh were self-emplyed and tenants. (Figures 3-6). They als had the highest levels f educatin. The great majrity were educated t beynd Junir Certificate level. Indeed, 36 per cent f them had a university degree. Financial capability Peple wh were secure had the highest levels f financial capability. They were very active savers, with an average scre f 82 ut f 100, and almst nne f them brrwed t pay bills r meet daily living expenses (scre 97). Cmpared with ther grups they exercised higher levels f spending restraint (78), even thugh their higher incmes meant that they had less need t d s. The level f restrained cnsumer brrwing was als very high (95). They were quite cnfident abut their abilities t manage mney (75) and tk quite a high degree f persnal respnsibility fr their financial decisins and utcmes (73). Abut half f them (52 per cent) said that their parents had discussed mney with them as a child. Pssible financial capability interventins These peple wuld nt be a pririty fr interventins t raise their level f financial capability.

20 18 Well-being in Nrway - summary reprt Ding OK, but with little put by This grup f peple had an average scre f 68 n the general measure f financial well-being. Fr the mst part they were able t meet their day-t-day cmmitments, but they had lwer levels f financial resilience fr the future. They represented a third (34 per cent) f the Nrwegian ppulatin. These peple were ding quite well n the meeting financial cmmitments measure, with an average scre f 87. Even s, three in ten f them (31 per cent) said that they ccasinally struggled t pay bills and ther cmmitments n time. Sme f them, hwever, had fairly limited rm fr maneuvre in their budgets, s that they had an average scre f 58 n the being cmfrtable financially measure. Indeed, nly six in ten f them (60 per cent) indicated that their finances allwed them t d what they want and enjy life. Their relative lack f prvisin against future financial shcks meant that they were ptentially at risk financially (their average scre fr financial resilience was 58). Almst tw thirds f them (64 per cent) had less than three mnths incme saved. Wh they are With an average age f 43, they were a gd deal yunger than thse wh were secure. They had mderately high (grss) husehld incmes that averaged NOK a year. Relatively few f them had experienced either a substantial drp in incme r a substantial rise in expenditure in the past 12 mnths. Nr did they include many unemplyed and selfemplyed peple (Figures 3-5). The prprtin f tenants was higher than amng the secure, but still lwer than in the tw ther grups. (Figure 6). Financial capability Peple wh were ding OK had fairly high levels f financial capability, althugh these were lwer than amng peple wh were secure. They were quite active savers, with an average scre f 68 and almst nne f them brrwed t pay bills r meet daily living expenses (scre 91). But they had a higher prpensity t spend than the peple wh were secure with an average scre f 64 n the measure f spending restraint. The level f restrained cnsumer brrwing was als lwer than amng the secure, but still very high (87). They were fairly cnfident abut their abilities t manage mney (66) and tk a mderately high degree f persnal respnsibility fr their financial decisins and utcmes (68). Half f them (49 per cent) said that their parents had discussed mney with them as a child. Pssible financial capability interventins Use f scial marketing and edutainment techniques t prmte active saving and spending restraint. Interventins helping peple help themselves, e.g. n the Internet.

21 Overview f Financial Well-being in Nrway 19 Just getting by Peple wh were just getting by accunted fr 6 per cent f the Nrwegian ppulatin. They had an average scre f just 42 fr general financial well-being. These peple wuld certainly be the target fr interventins designed t avert financial difficulties as well as building resilience fr future needs. Althugh they had an average scre f 61 fr meeting cmmitments, ne in ten (9 per cent) f them said that it was a cnstant struggle t pay bills n time and seven in ten (72 per cent) said that they struggled ccasinally. Almst fur in ten (37 per cent) said that they fell behind with payments frm time t time and 8 per cent admitted that it happened regularly. They had little rm fr maneuvre in their finances and scred just 37 n average fr being cmfrtable financially. And eight in ten (80 per cent) said that their finances did nt allw them t d the things that they want and enjy life. Mrever, they had very little mney put aside t cver them against incme r expenditure shcks with an average scre f 28 n the financial resilience measure. Three quarters f them (75 per cent) had less than a mnth s incme in savings. Wh they are Thse just getting by had belw-average grss annual husehld incmes at NOK Abut ne third f them had experienced a substantial drp in incme in the past 12 mnths, which is almst three times the natinal average. And ne fifth had seen their expenditure rise substantially in the same perid (Figures 3 and 4). 7 per cent f them were unemplyed again mre than twice the natinal average. (Figure 5). 43 per cent f them rented a hme and very few f them (5 per cent) were utright wners (Figure 6). Financial capability Peple wh were just getting by had much lwer levels f financial capability, than the previus tw grups. They had a lw scre fr active saving (50 ut f 100). And althugh mst avided brrwing t pay bills r meet daily living expenses (scre 78) a minrity f them were ding s. They exercised a fairly lw level f restraint n their spending (57) Hwever, the level f restrained cnsumer brrwing was higher (71). They were nt particularly cnfident abut their abilities t manage mney (54) and tk a mderate degree f persnal respnsibility fr their financial decisins and utcmes (62). Just fur in ten f this grup (41 per cent) said that their parents had discussed mney with them when they were yung. Pssible financial capability interventins One-t-ne caching and advice thrugh NAV/ self-help materials t prmte saving restraint and aviding brrwing fr day-t-day expenses, t imprve financial resilience fr the future and t encurage greater respnsibility fr financial decisins and utcmes.

22 20 Well-being in Nrway - summary reprt Struggling Abut 3 per cent f the Nrwegian ppulatin were clearly struggling financially and culd, ptentially, require the assistance f services prvided by NAV fr peple facing payment prblems. They had an average scre fr general financial well-being f nly 19 and very lw scres acrss all the mre- detailed measures. Their scre f just 34 fr meeting financial cmmitments indicated that they were in financial difficulty. Indeed, fur in ten (41 per cent) said it was a cnstant struggle t pay bills and ther cmmitments n time and all the rest admitted t struggling frm time t time. Abut half f them (51 per cent) said that they regularly fell behind with the payments n husehld bills and ther cmmitments and a further third (35 per cent) admitted ding s frm time t time. They had almst n slack in their budget at all as evidenced by their average scre f 17 n the being financially cmfrtable measure. In fact, almst all (98 per cent) said that their finances did nt allw them t d the things they wanted and enjy life. With an average scre f just eight n the financial resilience measure, they had n prtectin at all against future financial shcks. Almst all (98 per cent) f them had less than a mnth s incme in savings. Wh they are Withut dubt this was the mst ecnmically disadvantaged f the fur grups. Their annual incmes were less than half thse f the peple wh were financially secure NOK cmpared with NOK They were five times mre likely t have experienced a substantial incme drp in the past year and three times as likely t have had a substantial expenditure rise. (Figures 3 and 4). 15 per cent f them were unemplyed and a further 8 per cent were self-emplyed bth being the highest prprtins f all fur grups (Figure 5). Mre than half f them were tenants. (Figure 6). Financial capability They als had lwest levels f financial capability f the fur grups. Their scre fr active saving was just 39, but this might well be due as much t their lw incmes as it is t their lack f inclinatin t save. And althugh they had a higher scre fr nt brrwing fr daily living expenses (73) this was the lwest f the fur grups. Their scre fr spending restraint (57) was the same as fr peple wh were just getting by. The level f restrained cnsumer brrwing was als quite similar (74). They had fairly lw levels f cnfidence in their abilities t manage mney (40) and tended t feel respnsibility fr their financial decisins and utcmes lay with fate r thers (59). Financial educatin in childhd was rare. Only three in ten said that their parents had discussed mney with them as a child - which was the lwest prprtin f the fur grups. Pssible financial capability interventins One-t-ne caching and advice thrugh NAV t prmte saving restraint and aviding brrwing fr day-t-day expenses, t imprve financial resilience fr the future and t encurage greater respnsibility fr financial decisins and utcmes.

23 The Imprtance f Financial Well-being and Financial Capability Nrwegian peple, like their cunterparts in ther develped ecnmies, are increasingly being expected t take respnsibility fr their wn financial well-being bth currently and in the future. It is, therefre, imprtant t ensure that they have the capabilities t meet this respnsibility. In all develped ecnmies there has been a gradual shift in respnsibility fr financial well-being f individuals frm the state t the individuals themselves. At the same time, rising prsperity has gne hand-in-hand with rising cnsumerism and pressures t cnsume. And financial services firms have respnded t these changes by develping a diversity f prducts, whether that be credit cards, mrtgages t buy a hme, life insurance r savings fr retirement. The decisins and cnflicting pressures faced by individuals have never been greater, giving rise t cncern that they may lack the ability t deal with the respnsibilities and decisins they nw face and that their financial well-being culd be adversely affected. The earliest manifestatin f this cncern was in surveys f financial literacy, which assessed the knwledge levels f particular ppulatins r grups within them and interventins develped that sught t raise knwledge levels. In the mid-2000s a discussin began in earnest abut whether plicy makers shuld fcus mre n what peple d rather than what they knw - giving rise t the cncept f financial capability. At much the same time, behaviural ecnmists were raising similar cncerns abut the fcus n knwledge, arguing that psychlgical factrs are the main determinants f the behaviur f individuals (Buss 2009; Garcia 2013; Willis 2009). and that there is little evidence that knwledge has an effect. Research shws that the effectiveness f knwledge-based interventins in changing behaviur is mixed at best and, where there is ne, the effect is generally small (Fernandes et al. 2014; Hathaway & Khatiwada 2008). Fllwing a review f research n the links between knwledge and behaviur, the Cnsumer Financial Prtectin Bureau cncluded that factual knwledge in and f itself is nt sufficient t drive behaviur r behaviur change (CFBP 2015). Yet ur understanding f which financial capabilities are imprtant in determining financial well-being, hw these capabilities vary acrss the Nrwegian ppulatin and what influences them is still relatively slight. This hampers ur ability t design financial educatin and ther interventins t prmte financially capable behaviurs and, ultimately, financial well-being in Nrway. Financial well-being The extent t which smene is able t meet all their current cmmitments and needs cmfrtably and has the financial resilience t maintain Financial capability The behaviurs and appraches t financial decisin making that influence smene s financial well-being This study was, therefre, designed t fill these infrmatin gaps, by assessing the level f financial well-being in Nrway, identifying the mst imprtant financial capabilities and ther factrs that prmte high levels f financial well-being and explring the best ways f prmting higher financial capability and, ultimately, higher levels f financial well-being. The starting pint was a reanalysis f 58 fcus grups that tk place acrss the wrld, with peple f all ages and at all incme levels t identify hw the rdinary citizen perceives financial well-being and the factrs that they believe are imprtant

24 22 Well-being in Nrway - summary reprt in determining it. This was used t infrm the design f the survey used t cllect the data fr this reprt. The study has prved t be pineering and a grwing number f cuntries have replicated the survey, including: Australia, New Zealand, Ireland and Canada, with ther cuntries actively cnsidering ding s. Fr the first time, therefre, we have a rbust evidence base, with crss cuntry cmparisns, t infrm a debate n hw best t raise levels f financial capability and well-being in Nrway.

25 Financial Well-being in Nrway The average scre fr the general financial well-being measure was 73 (n a scale frm zer t 100), indicating that the Nrwegian ppulatin was ding quite well. Never-the-less there was a minrity f the ppulatin fr whm the situatin was much less benign. Financial well-being was measured using 11 questins cvering peple s financial situatin, in terms f hw well they were ding currently as well as the resilience they had against future ecnmic shcks (see the three text bxes belw). In general, the Nrwegian ppulatin was ding quite well, with an average scre f 73 n a scale frm zer t 100. Setting this in an internatinal cntext, the Nrwegian ppulatin as a whle had higher levels f financial well-being than the ppulatins f Canada (65), Ireland (64), Australia r New Zealand, each f which had an average scre f 59 (ANZ 2018a,b; Kempsn & Pppe 2018a). Segmenting the Nrwegian ppulatin There was, hwever, quite a variatin arund this average scre, with many peple ding very well indeed: regularly meeting all their current cmmitments with a cmfrtable margin and having resilience against future incme r expenditure shcks t. Others, hwever, were clearly in financial difficulty r at risk f payment prblems in the future. T explre this further, we created a categrisatin based n the scres fr general financial wellbeing, assigning peple t ne f fur categries (Figure 1). Well ver a half f the Nrwegian ppulatin culd be cnsidered financially Secure (scring mre than 80 pints). The secnd-largest grup a third f the ppulatin were peple wh were Ding OK (scring between and 80) but had much less resilience against financial shcks than the peple wh were secure. Figure 1: Overall financial well-being. Percent. Nrway N=1921. That leaves tw small grups wh were nt ding nearly as well. The first f these (6 per cent) culd be cnsidered t be Just getting by (they scred between and 50); while the secnd grup (3 per cent f the ppulatin) were bviusly Struggling financially (with scres f 30 r less). 1 Detailed measures f financial well-being Three sub-measures f financial well-being were als identified, which cmbined t make up the general measure f well-being discussed abve. These were: meeting current cmmitments; being financially cmfrtable and financial resilience fr the future. 57 % 3 % 6 % 34 % Struggling Just getting by Ding OK, but with little put by Secure 1 This categrisatin fllws the Australian apprach, which means that the results can be directly cmpared with the Australian distributin. (see ANZ 2018a). The results are cnsistent with ther research, shwing that arund 6% f Nrwegian husehlds regularly run int payment prblems, half f which have prblems dealing with debt bligatins in particular cnsumer lans and credit card debt (Pppe 2016, 2017).

26 24 Well-being in Nrway - summary reprt As might be expected, the mean scre was highest (91) fr meeting current cmmitments, which captures the ability t pay bills and ther cmmitments n time and having sufficient mney fr fd and ther expenses (see Text Bx). In ther wrds, relatively few f the peple interviewed said that they were experiencing such payment difficulties. Indeed, nly ne in twenty (5 per cent) f the ppulatin scred 50 r less n this measure. It shuld als be nted that the average scre in Nrway is higher than thse in Canada (81) and Ireland (80) and a great deal higher than in Australia (71) and New Zealand (72). In cntrast, the scre fr being financially cmfrtable was cnsiderably lwer, at 71, shwing that a minrity f peple were nt satisfied with their financial situatin and did nt have a lt f mney left ver after paying fr essentials t allw them t d the things they want r enjy (see Text Bx). The lwer scre was reflected in a larger prprtin f peple (19 per cent) scring 50 r less. Again, the Nrwegian ppulatin was ding rather better than Canadians and the Irish (bth with an average scre f 61) and a lt better than either Australians (55) r New Zealanders (54) The average scre fr the lnger-term measure f financial resilience fr the future was 73, again indicating a minrity f the Nrwegian ppulatin has rather pr prvisin against financial shcks (see Text Bx). Over tw in five (21 per cent) f the peple interviewed scred 50 r less n this measure. As befre, thugh, levels were higher than thse fund in Canada (60) Australia (53) New Zealand (52) and Ireland (52). Figure 2 Mean financial well-being sub-measure scres at different levels f verall financial well-being. Nrway N: 55 (struggling), 116 (just getting by), 646 (ding OK), 1102 (secure) Struggling Just getting by Ding OK, but with little put by Secure 91 Figure 2 shws the mean sres n each f these sub-measures fr ur fur segments f the ppulatin that were identified abve. We can see frm this that peple s scres n the general measure f well-being were reflected in their scres acrss all three f the sub-measures: meeting current cmmitments, being (and feeling) cmfrtable financially, and having financial resilience fr the future. Meeting cmmitments Financially cmfrtable Resilence fr the future S, the large grup f peple wh were cnsidered t be Secure financially had average scres f ver 80 n all three submeasures, which included an average scre f almst a hundred fr meeting cmmitments.

27 Financial Well-being in Nrway 25 The third f the ppulatin wh were Ding OK als had a very high scre fr meeting cmmitments, but their nes fr being cmfrtable financially, and resilience fr the future were cnsiderably lwer, indicating that they might nt be able t withstand a majr ecnmic shck t their budget. In cntrast the 6 per cent f peple wh were cnsidered t be Just getting by were, n the whle, keeping up with their cmmitments, but they clearly had very little mney left ver after ding s and had even less resilience fr the future. The remaining 3 per cent f peple wh were Struggling were falling behind with husehld bills and ther cmmitments and had n (r virtually n) mney put by t prtect them against future ecnmic shcks.

28 26 Well-being in Nrway - summary reprt Types f peple with the lwest financial well-being scres We assessed the relatinship between financial well-being and a wide range f sci-demgraphic and ecnmic characteristics using statistical mdels that, in effect, identified the independent effect f each ne after hlding all the thers cnstant. This enabled us t identify the key nes that influence financial well-being directly (See Kempsn & Pppe 2018b fr further details). Lw scres acrss all measures f financial well-being were strngly assciated with peple s ecnmic circumstances, including incme level and experience f either a substantial incme fall r a substantial increase in the husehld expenses (Figures 3 and 4). The size f the effect f an incme drp was cnsiderably higher than in ther cuntries. Emplyment status was als imprtant and the types f peple with the lwest scres included peple wh were unemplyed r self-emplyed, fllwed by part-time wrkers (Figure 5). Althugh peple unable t wrk thrugh lng-term sickness and disability did have lwer levels f financial well-being than either retired peple r thse wrking full-time, the effect was rather smaller due almst certainly t the relatively generus disability pensin in Nrway. On the whle, sci-demgraphic factrs were nt nearly s imprtant, althugh there was a strng assciatin with age, with peple aged ver 60 having by far the highest scres. Tenants als std ut as having much lwer scres than hme wners, particularly thse that wned their hmes utright and had n husing csts t pay (Figure 6). Figure 3 Average grss husehld incmes in NOK at different levels f general financial well-being. Nrway N=1919. Weighed Figure 4 Percentage f ppulatin experiencing substantial incme drps r expenditure rises at different levels f general financial well-being. Nrway N=1919. Weighed Struggling Just getting by Ding OK, but with little put by Secure All 0 Struggling Just getting by Ding OK, but with little put by Incme drp Expenditure increase Secure Figure 5 Percentage f ppulatin that is unemplyed r self-emplyed at different levels f general financial wellbeing. Nrway N=1919. Weighed Figure 6 Percentage f ppulatin that is a tenant, utright wner r 60 years r mre at different levels f general financial well-being. Nrway N=1919. Weighed Struggling Just getting by Ding OK, but with little put by Secure 0 Struggling Just getting by Ding OK, but with little put by Secure Unemplyed Self-emplyed Tenants Ourright wners Age 60+

29 Factrs that Prmte Higher Levels f Financial well-being Financial well-being f individuals is influenced by a cmbinatin f the incme they have and hw they use and manage that mney. At all incme levels, peple s ability t meet their current cmmitments and financial resilience fr the future are determined by their prpensity t save, t avid brrwing fr daily expenses and t exercise restraint ver bth spending and cnsumer brrwing. This shws that plicies are needed nt nly t prvide incme security but als t prmte financially capable behaviurs thrugh financial educatin, in its bradest sense, and ther interventins. The analysis 2 has shwn that the biggest gains in terms f general financial well-being wuld be thrugh interventins raise levels f financial capability by mdifying behaviurs. Fur key behaviurs were fund t have a direct effect n financial well-being: spending restraint, active saving, restrained use f cnsumer credit and nt brrwing t pay bills r meet daily living expenses. Other behaviurs, such as planning and mnitring ne s finances, infrmed decisin-making and active prduct chice did nt, hwever, prmte higher levels f financial well-being. In additin t these behaviurs, tw ther areas f financial capability were fund t have a direct effect n financial well-being: cnfidence in dealing with varius aspects f mney management and taking respnsibility fr ne s financial decisins and utcmes (financial lcus f cntrl). Hwever, even when all these factrs (and thers) were taken int accunt, incme was still imprtant in its wn right as was having experienced a substantial drp in incme. Never-the-less, lw incme r experience f an incme drp are insufficient explanatins f financial well-being. At all incme levels, a prpensity t spend and t use cnsumer credit damages financial well-being, as d brrwing t pay bills r meet ther daily living expenses and nt saving mney fr a rainy day. Likewise, peple wh experience a sudden substantial drp in incme can reduce their chance f damaging their financial well-being by nt engaging in these behaviurs. Very similar influences were fund acrss all three sub-measures f financial well-being, the mst imprtant difference being that being cmfrtable financially was nt influenced by spending restraint. Beynd that the differences related t the size f the effects that these capabilities had n the submeasures. In general, the effects f behaviurs were lwer fr feeling cmfrtable financially measure f financial well-being, but it was mre affected than the ther measures by bth financial cnfidence and taking respnsibility fr ne s financial decisins and utcmes. In cntrast, the effects f restrained cnsumer brrwing, active saving and nt brrwing fr daily expenses were very high fr financial resilience fr the future and the effect f financial cnfidence was very lw. By far the biggest effect fr meeting current cmmitments came frm nt brrwing fr daily expenses. It shuld, hwever, be nted that these differences were primarily a matter f nuance. 2 These findings are based n regressin mdelling which included: a wide range f behaviurs; attitudes and financial cnfidence and lcus f cntrl; knwledge and experience; persnality traits and a range f scidemgraphic and ecnmic factrs. (See Kempsn & Pppe 2018b fr full details).