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Year in Review: Financial Literacy in 2019
The history of financial literacy in America dates back to the founding fathers. Since then, it’s come a long way — and it continues to evolve.
In 2019, 40 states and Washington, D.C. considered legislation that would promote financial literacy. Beyond that, schools are teaching financial literacy to high school students. States are offering free classes to the public. Such efforts reflect a growing realization of the need for financial education, and a push to provide it.
With so much going on, it’s hard to keep up. Looking for a financial literacy recap? Here are 2019’s most important developments.
No. 1: Kentucky established the Financial Empowerment Commission
Kentucky Treasurer Allison Ball successfully advocated for the Kentucky Financial Empowerment Bill, HB 139, expanding financial literacy efforts to residents of the state. The bill passed with unanimous support from both chambers, establishing Kentucky’s Financial Empowerment Commission.
- The Commission will develop and implement plans to improve financial literacy and support educators in Kentucky.
- The Commission won’t use taxpayer dollars, thanks to a partnership with the Kentucky Credit Union League and Kentucky credit unions.
No. 2: Colorado Governor Polis signed the college kickstarter bill into law
In 2019, Colorado Governor Jared Polis signed HB 19-1280, creating a college kickstarter program. The free financial literacy program will incentivize the funding of a college savings account for every child born in the state. Advocates of the bill believe that a child with money already set aside for college will likely consider pursuing higher education, increasing rates of enrollment.
- A college savings account will be created for every child born or adopted in Colorado between January 1, 2020 and January 1, 2040.
- Each account will receive a $100 initial deposit, but parents or guardians must contribute additional funds thereafter.
- The funds will come from the CollegeInvest program, which is an existing program in the state’s Department of Higher Education.
- Anywhere from 2.5% to 52.5% of Coloradans could use the new education benefit.
No. 3: Nevada passed several financial literacy initiatives
Nevada made huge strides in supporting financial literacy legislation in 2019. New initiatives include establishing a State Seal of Financial Literacy Program, Financial Literacy Month, and a State Financial Literacy Advisory Council.
- The State Seal of Financial Literacy Program will recognize graduating high school students who are proficient in financial literacy. Eligible students will receive a state seal on their diploma and a note on their transcript for financial proficiency.
- Nevada’s Department of Education established Financial Literacy Month in addition to a host of activities, including Student Smart Week, Money Week, and a parent and family engagement summit.
- Nevada’s State Financial Literacy Advisory Council will create a plan for educational financial resources aligned with standards and curriculum. Resources will benefit the professional development of students, parents, families, and educators.
No. 1: Consumer Financial Protection Bureau Suspicious Activity Reports on Elder Financial Exploitation
This recent study from the Consumer Financial Protection Bureau (CFPB) sheds light on the frequency and characteristics of elder financial abuse in order to address the growing issue. Since 2013, more than 180,000 suspicious activities valuing more than $6 billion have been reported as targeting elders across the United States.
- Financial institutions reported $1.7 billion in suspicious activities targeting elders in 2017.
- Suspicious activity report (SAR) filings on elder financial exploitation (EFE) quadrupled from 2013 to 2017.
- Money service business’s SARs on EFE rose 43% from 2013 to 2017.
- $48,300 was lost on average for EFE SARs involving a checking or savings account.
No. 2: U.S. Financial Literacy and Education Commission Best Practices for Financial Literacy and Education at Institutions of Higher Education
The Financial Literacy and Education Commission created a report to establish best practices in financial literacy for institutions of higher education. The report highlights teaching methods and resources to increase students’ financial literacy, particularly on the topic of student loan borrowing.
Financial institutions should adopt the Consumer Financial Protection Bureau’s “Five Principles of Effective Financial Education,” which include:
- Understanding the individuals and families served
- Providing actionable, relevant, and timely information
- Increasing key financial skills
- Building motivation
- Simplifying the decision-making process and encourage good decisions
Financial institutions should adopt three additional best practices, which include:
- Creating standards for educators
- Providing support
- Assessing the impact
No. 3: NFCC Consumer Financial Literacy Survey
The March 2019 Consumer Financial Literacy Survey was conducted by Harris Poll among 2,017 U.S. adults. The report provides an overview of financial literacy trends and statistics, including the following
- More than 55% of U.S. adults grade themselves an A or B on their knowledge of personal finance.
- Nearly 88% say they are very or somewhat confident that they made the right choice for their last major financial decision.
- 12% admit they are not very or not at all confident in their financial choices.
- Only 17% of U.S. adults say they have never had any debt, and 54% struggle to minimize their debt due to unexpected financial emergencies.