Zogo’s general manager, Shyam Pradheep, resides in Austin, Texas, at the moment.
The cornerstone of financial wellbeing is financial literacy. It equips people with the foundational information they need to choose the optimal course of action for their unique situation.
Financial literacy helps both individuals and financial institutions since informed customers are frequently better, more active customers in their financial lives.
I’ve seen firsthand how financial literacy promotes overall financial wellbeing for both individuals and businesses after helping to coordinate financial education programs for over 250 banks and credit unions.
Unfortunately, the 2023 P-Fin Index shows that the majority of Americans lack the necessary knowledge and abilities to manage their finances, which creates significant issues for both individuals and financial institutions.
The alarm bells are screaming even louder today that only 48% of American adults can accurately respond to questions about their own finances.
Contrarily, despite the development of financial education programs in recent years—many of them spearheaded by the astute financial institution and corporate leaders perusing this page—this decline in financial literacy occurs.
Even if these programs frequently benefit both people and organizations, it is obvious that they are unable to meaningfully address the financial literacy crisis as a whole in their current iteration.
For those of us who are already demoralized by the enormous burden of resolving the financial literacy challenge, this may be discouraging. However, organizations can retarget their financial education initiatives to address the most pressing problems and have a real, quantifiable impact rather than sounding the alarm. This is how:
Target particular topics.
While it’s crucial to offer thorough financial education on a variety of topics to best empower your community, there are a few typical financial areas where people frequently encounter difficulties.
People do the worst when assessed on the categories of investment, insurance, and risk knowledge when measuring functional financial literacy.
These statistics and bigger external trends both indicate that these three areas require special education attention.
For instance, the expansion in retail investing necessitates a greater emphasis on investor education, and a potential impending recession necessitates that customers have a better understanding of risk.
To make a dent in the financial literacy epidemic, it’s critical to prioritize certain topics as you set the goals for your financial literacy program.
Sending out surveys and conducting internal data analysis are excellent ways to identify the issues your community requires focused attention on.
Surveys are useful for gathering information on attitudes and gauging how well people understand their financial behavior.
You can influence the things you emphasize by finding out about the subjects that individuals are most passionate about or are least secure discussing.
To further your understanding and offer you an advantage in choosing the best course of action for your community, you can compare survey data with your internal data regarding people’s actual financial behavior.
But who you concentrate on matters just as much as what you concentrate on teaching.
Consider the people.
Financial education should be available to everyone, but some people need it more immediately than others.
In surveys of financial literacy, women, young people, and persons of color perform disproportionately lower.
They have historically and systematically had less access to personal finance education, not because they are intrinsically less clever or financially savvy.
Closing these gaps is one of the most important aspects of addressing the financial literacy challenge.
Your financial literacy campaigns must place a strong emphasis on educating underrepresented groups.
To better engage these underrepresented populations, one tactic is to collaborate with another organization, such as a POC, Gen Z, or women NGO.
The inequalities in financial literacy that exist across racial, gender, and age groups can be closed by combining your financial education programs with focused community engagement.
This is one of the most important things you can do for your programming because it targets the people who need financial literacy the most and gives you useful information for your ESG/DEI projects.
Put learning objectives first.
Financial literacy is about preparing people for success in life, not just passing a test. Pay attention to behavioral results as you refine your financial literacy initiatives.
Create a curriculum that encourages people to act in ways that will lead to their long-term stability and success.
Instead of simply instructing them to “have an emergency fund,” for instance, show them how to determine how much they need and the measures they should take to save it.
This is a fantastic approach to evaluate the value of your education as well! For each class, establish an action-oriented goal, and then follow up with students to determine if they’ve continued with that behavior.
Your program will be more successful the more people who have. The need to reform education to better encourage real-world application grows as student numbers decrease.
You can have a more thorough and meaningful impact on the financial wellness and literacy of your community by adopting an outcome-oriented strategy.
Even while the current condition of financial literacy is concerning, we can take action to improve it. To create a brighter future, it is our collective responsibility to strengthen our financial education programs.
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