Financial literacy and empowerment in child welfare

This guide is intended to provide a general overview of financial literacy and empowerment in the child welfare context, with a specific focus on supporting youth in transition.

If you are looking for more general resources on supporting transitional-aged and older youth, see the guide here. Resources related to poverty and child welfare, can also be found here.

Financial literacy refers to the skills and knowledge required to make informed decisions to manage one's finances, while financial empowerment is a process that focuses on supporting people's financial well-being, primarily by providing information and opportunities to increase financial literacy and by ensuring access to appropriate financial services and products.

Financial empowerment is often framed as an approach to poverty reduction with the goal of improving outcomes for low-income people. It is not a standalone approach to poverty reduction; rather it is intended to complement other strategies, for example, investments in affordable housing and the development of employment and training programs. 

Financial empowerment strategies can be particularly impactful for youth involved with child welfare – who may have less exposure to adults who can model financial behaviours or provide knowledge transfer and support around managing finances. This is particularly true of financial empowerment strategies which consider the principles of trauma-informed practice and acknowledge the financial barriers and limitations faced by low-income and vulnerable populations.

In 2008 the Ministry of Children and Youth Services announced the Ontario Child Benefit Equivalent (OCBE) for children and youth in care and customary care.

For all children and youth in care and in customary care, ages 0 to 17, OCBE funds can be used to access recreational, educational, cultural, and social opportunities that support the achievement of higher educational outcomes, a higher degree of resiliency, social skills and relationship development, and a smoother transition to adulthood ("Activities Program"). Youth in care or customary care, ages 15 to 17, are also eligible to participate in a program that would see OCBE savings funds deposited into their personal savings account ("Savings Program").

On January 1 2018, legislative amendments to the Child and Family Services Act (CFSA) to raise the age of protection were proclaimed. These amendments included the Voluntary Youth Services Agreement (VYSA) for youth who are 16 or 17. Then on April 30 2018, at the same time the new Child, Youth and Family Services Act (CYFSA) came into effect, an amendment to Ontario Regulation 257/09 under the Ontario Child Benefit Equivalent Act expanded OCBE eligibility to include youth in a VYSA. Though they are not in the legal care of a society, youth in a VYSA are now able to participate in both the OCBE Activities Program and Savings Program.

All youth participating in the OCBE Savings Program are expected to meet certain requirements, including "acquire financial skills and demonstrate financial competency relevant for independent living." CASs are also expected to work with eligible youth to assist them to meet requirements for the Savings Program. Specifically, under the new OCBE policy directive (CW002-18), CASs are to make available to each eligible youth a financial literacy program that is consistent with the Ministry's financial literacy program framework. This program is to be delivered to each youth either directly by the CAS or through another entity (e.g. community-based youth-serving agency) that has expertise in effectively teaching financial skills to youth.

As per Policy Directive: CW003-18 - Protection Services for 16-17 Year Olds (9 iv), CASs are also required to engage youth in specific planning with respect to transitioning to adulthood and independence, including building financial literacy skills, as part of developing a Voluntary Youth Services (VYS) Plan.

Finally, the new Registered Education Savings Plans (RESPs) policy directive (CW004-18) also stipulates requirements around the financial literacy of youth in a VYSA who have chosen the savings account option in lieu of an RESP: youth must demonstrate financial competency in order to receive the savings funds upon expiry or termination of the VYSA.