Financial Literacy – Financial literacy describes the skills, knowledge and tools that equip people to make individual financial decisions and actions to attain their goals; this may also be known as financial capability, especially when paired with access to financial products and services.

Financial literacy has been added to in school classwork. Fifteen states require that financial literacy concepts be taught as part of other classes – usually math or economics. Twenty-nine states have no financial education requirements. Six states require a class in financial literacy:

• Alabama
• Missouri
• Utah
• North Carolina
• Virginia
• Tennessee

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Financial education is the process by which people gain information, skills, confidence and motivation to act, through various means, including classroom education, one-on-one counseling and coaching, technology-based interventions, and self-study.

A key desired outcome for financial education is sustained financial well-being in which people can fully meet current and ongoing financial obligations, can feel secure in their financial future, and are able to make choices that allow enjoyment of life.

Source: U.S. National Strategy for Financial Literacy 2020 located at: https://home.treasury.gov/system/files/136/US-National-Strategy-Financial-Literacy-2020.pdf

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Financial well-being - a state of being where you:

• Have control over day-to-day, month-to-month finances;
• Have the capacity to absorb a financial shock;
• Are on track to meet your financial goals; and
• Have the financial freedom to make the choices that allow you to enjoy life.

Source: https://files.consumerfinance.gov/f/201501_cfpb_report_financial-well-being.pdf

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Financial Knowledge/Ability – knowledge that supports financial well-being. A set of skills of financial ability that encompasses:

• Knowing when and how to find reliable information to make a financial decision;
• Knowing how to process financial information to make sound financial decisions; and
• Knowing how to execute financial decisions, adapting as necessary to stay on track.

Source: Financial well-being: The goal of financial education located at: https://files.consumerfinance.gov/f/201501_cfpb_report_financial-well-being.pdf

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Financial Literacy – Why Needed?

Report on the Economic Well-Being of U.S. Households in 2020 -May 2021

Excerpts:

• Nearly one-fourth of adults were worse off financially compared to 12 months earlier, up from 14 percent in 2019.

•Adults with at least a bachelor's degree were much more likely to report doing at least okay financially (89 percent) than those with less than a high school degree (45 percent). This gap increased from 34 percentage points in 2019 to 44 percentage points in 2020.

• Less than two-thirds of Black and Hispanic adults were doing at least okay financially, compared with 80 percent of White adults and 84 percent of Asian adults.
• More than one-fourth of adults were either unable to pay their monthly bills or were one $400 financial setback away from being unable to pay them in full.
• More than 6 in 10 non-retirees with self-directed retirement savings expressed low levels of comfort in making investment decisions with their accounts.
• Unbanked and underbanked rates were higher among adults with lower income, adults with less education, and Black and Hispanic adults. The largest differences were by education and income level.
• Fourteen percent of adults were laid off at some point in 2020.

Source: Economic Well-Being of U.S. Households in 2020 located at https://www.federalreserve.gov/publications/2021-economic-well-being-of-us-households-in-2020-executive-summary.htm