Improving financial capability

Financial capability is an umbrella term that puts forward the factors behind making well-informed decisions to manage financial resources. Traditional definitions limit the components to skills and knowledge; however, the authors align with a recent movement to include opportunities and motivation as part of this definition. The traditional definitions posit financial literacy as the main factor behind financial capability; however, with this new definition, the authors present a framework to understand financial capability through behaviour science and the growing field of economic psychology (behavioural economics). Here they identify ways to improve financial capability through the use of behaviour change science, an emergent sub-field in behavioural science and behavioural economics. They utilize the current literature of behaviour change in the health care domain how financial capability can be improved, and how policy-makers and practitioners can utilize the behaviour change science to produce better outcomes for consumers.