What is a Financial Nomad?

financial nomads

Source: jannoon028 via FreeDigitalPhotos.net

Life is a journey whose destination varies for us all. Where we end up in life is often the product of our decisions, choices and chance. There’s not a single path to follow and many people find themselves becoming financial nomads along the way.

A financial nomad works and earns wages to support their families, but forgoes the assistance of a financial services provider to help guide their journey. They choose to do this either because they don’t have access, or they don’t fully understand how important a financial service provider is to their overall financial health.

For financial nomads, the world of finance and investing can seem like a towering Aztec temple whose sides are steep, with a sacred yet intimidating appearance. Often, they don’t feel they can access the opportunities contained within because they fear the costs and learning curve it takes to enter. This is a belief that billions of people around the world share, and they’re robbing themselves of the reliability and stability that institutional financial services can provide.

Oftentimes, financial nomads use institutional financial services only when it’s the only option they have remaining. Negative experiences, the perception that they won’t have enough assets to receive service and the costs of financial services keep them from looking towards the future and putting money into savings accounts and retirement funds. This is to their detriment and keeps them reliant on even more expensive services, such as payday loans, which can cause considerable damage to their financial health.

The distribution of financial nomads isn’t even around the world. Industrialized nations with higher incomes tend to have fewer financial nomads than within developing countries. Clearly, income, age and education level plays a big factor in this, but it is also important to note that there are wide variations between urban, suburban and rural areas where access to financial services vary.

As studies show, those under age 25 and above 65 are the least likely to have financial services accounts. Further, those living in cities are more likely to have accounts than those living in rural communities. Then, of course there’s the gender difference, which shows that fewer than 40 percent of women have their own financial services accounts.

The world is full of financial nomads, but there are ways you and I can help make financial services more inclusive and accessible for these individuals, which I’ve discussed in depth in my upcoming book “Financial Inclusion at the Bottom of the Pyramid.” I invite you to ‘like’ my book on Facebook, to join the conversation on financial inclusion, as well as to be the first to know the release date of my book.

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About Carol Realini

Serial Entrepreneur, Mobile Payments and Banking Pioneer, Author, Board Member Carol Realini is a successful Silicon Valley executive and expert in financial service innovation. She has worked with leading financial institutions including MasterCard and Citi, as well as numerous multinational and regional banks, to change the way banking is conducted. In 2011, as a Technology Pioneer attending the World Economic Forum, she led discussions on alternative banking at their meeting in Davos. A serial entrepreneur, she has been recognized as one of the 50 Top Women in Technology by Corporate Board Member magazine. Carol is a huge believer in the potential of mobile banking and payments to create financial inclusion - where everyone with a mobile phone has access to affordable financial services that empower their life and work. To understand Carol's vision please watch the WEF video (click on the weforum.org link below). Carol also mentors entrepreneurs providing wisdom and lessons learned from her four successful startup experiences.
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3 Responses to What is a Financial Nomad?

  1. Jim Wells says:

    Trying to understand why anyone would be surprised that a financial nomad (non-traditional from the git-go) “forgoes the assistance of a financial services provider to help guide their journey” and chooses instead to rely on the assistance of non-traditional financial service providers where each transaction is discrete and exerts no influence on either the nomad or the provider when the transaction is completed?

    • I am surprised how few people understand the needs and choices of the underbanked

      • Jim Wells says:

        Agree 100%. Problem is that the continuing wrongheadedness of too many so-called thought leaders who believe that financial inclusion requires everyone to have a bank account diverts precious resources into efforts doomed from the start and away from initiatives that would expand access to safe, convenient and effective financial inclusion solutions. In the US, there are thousands of non-bank financial service providers, licensed and supervised by the same state agencies that license and supervise banks & credit unions, that could be incorporated into comprehensive networks to serve the financial needs of ALL citizens.

        The continuing references to “unbanked & under-banked” conveniently infer that the problem lies with these consumers, when, in reality, the problem rests with government-insured financial institutions that refuse to serve ALL citizens. The pretense allows banks to escape responsibility for their short-comings by throwing some money at so-called “Financial Literacy” programs, rather than building the products and programs required to serve the financial needs of non-traditional consumers.

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