Financial Literacy in America

    
Title V of the Fair and Accurate Credit Transactions Act of 2003, known as the Financial Literacy and Education Improvement Act, created the Financial Literacy and Education Commission, comprised of twenty federal agencies, and charged it with coordinating federal efforts and developing a national strategy to promote financial literacy in America.  In November of 2004 the GAO (Government Accountability Office) hosted a forum of some twenty government, private sector and nonprofit organizations to study the problem of financial literacy and recommend policy initiatives to improve financial education in America.  The result of this forum is summarized in the GAO report (Comptroller General’s Forum: The Federal Government’s Role in Improving Financial Literacy):
  • The Federal Government should serve as a leader.  It should use its influence, authority and “bully pulpit” to make financial literacy a national priority.
  • Increased public-private partnerships and interagency coordination are needed.  Partnerships between federal agencies and other (private sector and not-for-profit) organizations are the best way…to help federal agencies reach targeted populations at the community level.
  • Consumers need financial information on a broad range of topics.  Among the most important topics for financial education are basic skills – such as budgeting, planning and managing money – as well as information on saving for retirement, investing and managing credit.  Financial education should be delivered at “teachable moments” when the information is applicable to a person’s life.
  • A variety of methods are needed to deliver financial education effectively.  Although participants favored using a variety of different delivery methods to reach different audiences, they added that personal interaction is often the most effective vehicle for conveying information in a way that actually impacts behavior.
  • Financial literacy programs need to be evaluated.  Participants noted that federal agencies should carefully consider whether they have sufficient expertise to deliver financial education effectively or whether another entity, such as a private or nonprofit organization, might be a more appropriate choice.

The Heartland Institute of Financial Education, a non-profit organization, is committed to these five summary conclusions of the GAO report.  The Institute’s CFEd® designation program was developed as one means to provide a standardized tool to both provide and ensure the monitoring of quality financial literacy to Americans.
 
Why is Financial Literacy So Important?
 
The GAO report lists a number of trends that have emerged in recent years that underscore the importance of financial literacy in everyday life:
  • Consumers are faced with a wider and increasingly complicated array of options for managing their personal finances as well as selecting investments and credit products.
  • Technological advances have increased the capacity for targeted marketing to consumers, potentially increasing their vulnerability to predatory lenders and other unscrupulous providers of financial services.
  • Consumers are increasingly responsible for their own retirement savings, with traditional defined-benefit retirement plans becoming less common.
  • The personal saving rate has fallen dramatically, declining from nearly 7% of gross domestic product in the 1970s and 1980s to around 2% in recent years.
  • Household debt as a percentage of income hovers at record high levels.  In addition, bankruptcy rates have more than quadrupled in the past twenty years.   

Because of these trends, the Heartland Institute of Financial Education offers the CFEd® designee program to professionals in the various fields of financial services.  It is our commitment and our belief that the CFE Certified Financial Educator® program will assist financial professionals’ participation in the financial literacy movement to provide Americans with quality, practical and measurable financial education.


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WHAT PARTICIPANTS SAY

“This information was very informative. Thanks for the opportunity.”  
- United Airlines
 
“I think this class is a great way to get started making personal changes. It covered a lot of information!”  
- AON Consulting
 
“This is a great class. I want to spend more time with more classes like this.”  
- APL
 
 “I've never felt so confident in my knowledge of our family's finances.”
- Washington Group International
 
“I had a lot of questions when the class started.  I feel much better about my ability to make decisions now.”
- Gates Corporation
 
“Very knowledgeable instructor.  Excellent and very useful information.”
- Library Corporation
 
“Great information!  The tax and investment sections were very helpful. It's good to know how to combat inflation.”
- Craig Hospital
                                                        
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