Financial capability of people with low income: Results from the Canadian financial diaries

Household income, assets, and socioeconomic context influence people's financial behavior and their financial literacy. This study uses a mixed methods financial diaries to understand the strengths and weaknesses of the finances of 28 Canadians with low income. Contrary to results from national surveys on financial literacy, we found that these low‐ and modest middle‐income participants were careful with their finances by doing things such as paying of one's credit card immediately, deliberately focusing on needs, and tracking one's finances. There were cases of decisions that seemed to harm the participants longer‐term financial wellbeing but, in many cases, barriers in banking, the labor market, and government support programs prevented a better choice.