This report examines the financial competence of low income households in the Solomon Islands. The financial competencies which have been measured were identified by asking low income households in both rural and urban areas to describe the financial activities they needed to be able to undertake in order for the household to manage its cash-flows effectively.
The study has found low income households have generally low levels of financial competence. This means most households are only able to competently undertake a subset of the financial activities required by the household to manage money effectively. Households are generally better at managing immediate and shorter term financial activities and less competent at managing longer term financial activities (including activities that require forward planning) as well as more complex financial activities, including those which require engagement with the formal financial system. Overall, understanding of the cost of money was found to be very low.