The financial world that consumers must navigate has changed significantly and grown more complex, increasing the need for financial literacy and raising questions regarding consumers’ financial capability.
Financial literacy focuses on the specific knowledge and concepts consumers need to manage their money and build wealth, depending on an individual’s situation. It may mean learning how to create and manage a household budget, learning how to invest money for retirement, or participating in one-on-one coaching and counseling to determine how to buy a house or start a business. It also can be part of an overall strategy to increase economic security for lower-income families.
Financial literacy is one factor in the larger analysis of the financial capability of consumers, which is the broader picture of how consumers manage their resources and how they use their financial literacy to make financial decisions.
The chart below lists state legislation introduced or pending during the 2015 legislative session relating to financial literacy or financial education. Thirty-five states and Puerto Rico had pending financial education and financial literacy legislation in the 2015 legislative session.
Examples of enacted legislation includes: Connecticut broadened the topics that must be included in the financial literacy instruction plan, which by law, the Department of Education, Board of Regents for Higher Education, and UConn Board of Trustees may develop. Delaware codified a State Office of Financial Empowerment, housed within the Department of Health and Social Services, to ensure the sustainability of the Stand By Me program and other financial empowerment programs. Illinois amended the School Code to add the subjects of consumer debt, higher education student loans, and identity-theft security to the list of subjects that are required to be included in the financial literacy component of consumer education. Michigan amended the Revised School Code to allow the half-credit economics requirement for a high school diploma to be satisfied by completion of a one-half credit course in personal economics. Puerto Rico directed the secretary of Education of the commonwealth to include a financial literacy program within the mandatory mathematics curriculum for students of middle and high school public education system and created a National Alliance for Financial Empowerment for establishing and implementing initiatives and educational programs on financial responsibility in our correctional population.Virginia enacted legislation directing the Department of Social Services, in consultation with the Virginia Employment Commission and Virginia Community College System, to develop and implement a plan under which citizens receiving public assistance will be provided information on free financial literacy courses. Arizona, California, Florida, Iowa, Michigan, Pennsylvania and Rhode Island adopted resolutions declaring April as Financial Literacy Month. Hawaii adopted a resolution requesting the Department of Education to establish a Hawaii public schools financial literacy task force.
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Heather Morton is a program principal in Fiscal Affairs. She covers financial services, alcohol production and sales, and medical malpractice issues for NCSL.