National Financial Literacy Month: Improving Access & Quality

Last year, President Obama proclaimed April as National Financial Literacy Month, calling it a time to “recommit to improving financial literacy and ensuring all Americans have access to trustworthy financial services and products.”

Our advocacy focuses on asset building among low-income populations and financial education is an important component. While our efforts are year-round, we believe highlighting financial literacy in April only helps spread the message to more people.

Financial education is critical to developing financial literacy, which results in smarter consumers who optimize their household budgets to create greater opportunity to pay off debt, save and invest. Financial education helps consumers avoid financially destructive transactions and fraud while teaching them how to exercise their rights as consumers.

Research shows that youth who receive financial education gain skills and tools to secure lifelong financial health.

• 86% of youth participating in financial education curriculum demonstrated an increase in financial knowledge or behavior when dealing with money.
• Three months after participating in a financial education course:
  • 58% improved their spending habits
  • 56% improved their savings habits
  • 39% identified starting a savings account as the program’s most important impact
• Five years after high school, students with mandated financial education in high school had self-reported savings rates 1.5% higher than those without mandated education.
• Youth involvement in financial education encourages other family members to save and/ or pursue post-secondary education.

These statistics call for increased financial education in Illinois schools. Currently, financial education is a minor part of the public school curriculum, which shortchanges students now and for the future.

Developing financial literacy is needed among consumers of all ages and particularly among low-income consumers who face multiple challenges.

Several resources are available this month to promote financial literacy. Money Smart Week, in its 10th year, appropriately falls during April. The public awareness campaign stresses the importance of financial literacy and offers free educational seminars from April 21-28. You can search for events in Illinois on the Federal Reserve Bank of Chicago website.

The nonprofit group Money Management International created a website for National Financial Literacy Month to educate and assist consumers in achieving financial wellness. Check out the site’s Thirty Steps to Financial Wellness and join the 2012 Financial Literacy Challenge for a chance to win $500.

As Money Management International points out, too many individuals and families are not sufficiently educated about their personal finances. As a country, we have more than $2 trillion in consumer debt and 30% of consumers report having no extra cash, which makes it impossible to escape of living paycheck to paycheck.

So, this month, let’s move closer to financial stability by recommitting to increasing access to effective financial education for all.