History of Financial Literacy
The history of financial literacy shows that it has not changed much in the past few hundred years. Recently, financial literacy has received an increase in attention due to the ever-advancing complexities of the global financial markets. In one of the earliest acknowledgements of the importance of financial literacy, former president and founding father John Adams attributed many of America’s problems to “downright ignorance of the nature of coin, credit, and circulation”. Interest in producing a financially literate populace increased from then on.
Financial Literacy Programs Must Lead to Improved Financial Behavior
Over the course of financial education history, a shift from simple knowledge transfer to behavioral molding has taken place. Teachers have quickly learned that the most effective financial literacy initiatives do not simply focus on imbuing learners with financial knowledge, but also place an emphasis on using that knowledge to enhance the financial well-being of the individual. Only through the application of financial competencies can individuals hope to meet their financial goals.
Significant Points of Interest
By the 1950’s, 50% of home economics research comprised of financial literacy. https://scholarworks.montana.edu/
More recently, in 1995 former CEO of the Ford Motor Credit Corporation, William Odom, supported the creation of the Jumpstart Coalition, a prominent financial educator that continues to operate today. https://www.jumpstart.org
The recent war against the financial illiteracy epidemic is being waged worldwide. In 2002 Japan’s Central Council for Financial Services Information published guidelines for a national financial literacy strategy. Similarly, the Financial Services Authority of the United Kingdom began a national strategy for financial capability in 2003. Today, the importance of financial literacy has been recognized by many countries, and efforts continue to improve financial education.
Experts Speak About the Importance of Financial Literacy
Experts Speak About the Importance of Financial Literacy
“Financial literacy is just as important in life as the other basics.” – John W. Rogers, Jr., CEO Ariel Capital Management
“Without financial literacy, divorce rates soar, families rupture, and women stay with abusive men for financial security. A lack of jobs contributes to riots and illegal activity. Name any situation and it goes back to money. We need to focus on poverty eradication.” – John Hope Bryant, CEO of Operation HOPE
“Academic qualifications are important and so is financial education. They’re both important and schools are forgetting one of them.” – Robert Kiyosaki, founder of the Rich Dad Company
Today’s Youth and Adults Appear Financially Illiterate
18% of adults cited retiring without having enough money set aside as their top personal finance worry (National Foundation for Credit Counseling).
https://www.nfcc.org/wp-content/uploads/2017/03/NFCC_BECU_2017-FLS_datasheet-with-key-findings.pdf
54% of millennials expressed worry that they would not be able to pay back student loans (PwC). https://www.pwc.com/us/en/about-us/corporate-responsibility/assets/pwc-millennials-and-financial-literacy.pdf
The History of Personal Finance Should Not Be an Example for the Future.
Studying the history of financial literacy shows that a portion of the population have always suffered from a lack of understanding about their personal finances. Developed countries are no exception, and the problem does not seem any better today than it was hundreds of years ago. The average person still fails even basic financial literacy standards.
Recent worldwide awareness and recent financial literacy statistics have spurred policymakers into action to tackle the problem. Efforts must be designed and implemented according to historical data on what makes for a quality financial education program. The educational information must be aligned with the audience and it must produce a positive change in behavior. When national momentum shifts toward higher awareness of personal finances, perhaps it will naturally spread throughout society and financial literacy will become the norm.
Learn more about the NFEC’s free financial literacy classes and online personal finance courses in communities globally. Led by trained and certified financial education instructors.