Financial literacy efforts can play an important role in ensuring consumers’ financial health and stability. But not all programs are created equal, a Government Accountability Office (GAO) report reveals.
The most effective way to improve financial literacy may involve a combination of education, financial incentives, and automatic enrollment in employer retirement plans, according to GAO’s “Financial Literacy: A Federal Certification Process for Providers Would Pose Challenges.”
The study was mandated by the Dodd-Frank Wall Street Reform and Consumer Protection Act to examine current financial literacy efforts and to determine the feasibility of certifying financial literacy providers.
To address these objectives, GAO reviewed evidenced-based evaluations of financial literacy programs and approaches, and interviewed federal, private, academic, and nonprofit providers—including CUNA’s business-to-consumer publishing department.
The report isn’t optimistic about prospects for certifying financial literacy programs. Although some financial literacy approaches improve consumers’ knowledge and money management skills, there’s little consistency among these efforts.
Plus, creating a federal process for certifying financial literacy programs would be complicated and costly, and it would be difficult to standardize content to interest all participants, the report states.
But student programs may be different.
The study found the National Endowment for Financial Education’s [NEFE] High School Financial Planning Program, a high school curriculum covering basic financial planning concepts, helped 60% of participants improve their spending and saving habits three months after the course ended.
Similarly, a study of middle school students found that taking a six-week economics class resulted in improved knowledge and increased confidence in making financial decisions.
The study notes common themes among successful financial literacy programs:
“Through CUNA’s longstanding partnership with NEFE and the National Institute of Food and Agriculture, the credit union movement is helping to prepare millions of teenagers for lifelong financial literacy,” notes CUNA President/CEO Bill Cheney.
Click here to access the full report [pdf].
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