FINANCIAL LITERACY

Financial Literacy

Financial Literacy

Introduction

Financial literacy encompasses the knowledge and skills for personal financial planning, the selection of financial services, budgeting and investing, developing an insurance program, credit management, (Crosson, Krull, Deines and Gold 2008)consumer purchases, consumer rights and responsibilities, and decision-making skills for all aspects of life as consumers, workers, and citizens.

The power of financial education when coupled with comprehensive advocacy support can serve as a solid foundation for domestic violence survivors who are seeking safety and autonomy. Access to economic resources that help meet basic human needs is a safety predicator for many who experience abuse. (Carty 2005)

Financial literacy affects all aspects of an individual's planning and spending: income, money management (Duvall 2005), the use of credit, saving and investing, and decision making for the wise use of resources. A lifelong process, financial literacy is a critical area of knowledge and skills for all consumers who must make choices about their financial resources. From a child's earliest spending to a senior citizen's retirement decisions, individuals apply their knowledge and skills to financial choices. Managing finances has become increasingly complex. (Duvall 2005)

Organizations Promoting Financial Literacy

A number of organizations are active supporters of financial literacy, and many focus on financial education for young people. The Jump$tart Coalition for Personal Financial Literacy was convened in 1995 to promote personal financial literacy, particularly among young adults, and is a major source of financial literacy information. (Morgan 2009) Membership in the coalition includes more than 160 organizations committed to improving young people's knowledge and skills. (Financial Services 2006) A few of the member organizations are: American Institute of Certified Public Accountants, American Council on Consumer Interest, Federal Deposit Insurance Corporation, Girl Scouts of the USA, NAACP, Social Security Administration, and the Foundation for Financial Literacy. (The Policies Commission for Business and Economic Education 2006)

Resources For Financial Literacy

A function of Jump$tart is to serve as a clearinghouse for educational tools and resources, prekindergarten through adult, for all types of educational programs. These tools and resources, available from members of the coalition, include audiotapes, books, textbooks, booklets/pamphlets, periodicals, posters, simulations/games, software/xcompact disks, student workbooks , lesson plans, teaching guides, videos, and Web site links. (Luft 2007) Jumpstart maintains an online database of national training programs available to consumers and educators. The materials available from the Jump$tart clearinghouse help educators and students with financial literacy programs. The materials can also assist adults to develop financial literacy—an important point, since financial matters change throughout one's life. Materials are organized by topic: income, money management, saving and investing, and the use of credit .

Income

What income is to be managed? This question is a first step in wise management of financial resources. All consumers must manage their finances, but incomes vary. "Stretching" income to meet needs and wants is a part of financial management; knowing how to develop goals for spending, based on a realistic understanding of income, is a basic part of financial literacy. (Davis and Carnes 2005)

Money Management

Money management is the process of planning how to get ...