- Financial literacy
Financial literacy is the ability of individuals to make appropriate decisions in managing their
personal finance s. Raising levels of financial literacy is now a focus of government programmes in countries including [http://www.mymoney.gov/pdfs/ownership.pdf ”Taking Ownership of the Future: The National Strategy for Financial Literacy”, US Financial Literacy and Education Commission, 2006] ]Australia ,Japan , theUnited States and theUK . The Organisation for Economic Co-operation and Development (OECD ) started an inter-governmental project in 2003 with the objective of providing ways to improve financial education and literacy standards through the development of common financial literacy principles. In March 2008, the OECD launched the [http://www.financial-education.org International Gateway for Financial Education] , which serves as a clearhouse for financial education programmes, information and research worldwide. In the UK, the alternative term “financial capability” is normally used: theFinancial Services Authority (FSA) in the UK started a national strategy on financial capability in 2003. The US Government also established itsFinancial Literacy and Education Commission in 2003.International findings
“Yet it is encouraging that the few financial education programmes which have been evaluated have been found to be reasonably effective. Research in the US shows that workers increase their participation in 401(k) plans (a type of retirement plan, with special tax advantages, which allows employees to save and invest for their own retirement) when employers offer financial education programmes, whether in the form of brochures or seminars.”
Australia
The Australian Government established a National Consumer and Financial Literacy Taskforce in 2004, which recommended the establishment of the
Financial Literacy Foundation in 2005. The task force also recognised the need for asocial marketing campaign.The Australian Federal Government created a website "Understanding Money" in mid 2006. [http://www.understandingmoney.gov.au]United Kingdom
The current UK strategy involves the FSA spending about £10 million a year [http://www.fsa.gov.uk/pubs/other/fincap_delivering.pdf “Financial capability in the UK: Delivering Change”, Financial Services Authority, 2006, page 1, ISBN 1-84518-418-1] ] across a seven-point plan. The priority areas are:
* New parents
* Schools (a programme being delivered bypfeg )
* Young Adults
* Workplace
* Consumer communications
* Online tools
* Money adviceA baseline survey conducted 5,300 interviews across the UK in 2005. The report identifies four themes:
* Many people are failing to plan ahead
* Many people are taking on financial risks without realising it
* Problems of debt are severe for a small proportion of the population, and many more people may be affected in an economic downturn
* The under-40s are, on average, less financially capable than their elders“In short, unless steps are taken to improve levels of financial capability, we are storing up trouble for the future.”There are also numerous charities in the United Kingdom working to improve financial literacy such as
Credit Action ,The Talking Economics Project ,Citizens Advice Bureax and thePersonal Finance Education Group .United States
The US Treasury established its
Office of Financial Education in 2002; and the US Congress established the Financial Literacy and Education Commission under the Financial Literacy and Education Improvement Act in 2003. The Commission published its National Strategy on Financial Literacy in 2006.Notes
External links
* [http://www.financial-education.org/ OECD International Gateway for Financial Education]
* [http://www.fsa.gov.uk/financial_capability/ FSA National Strategy for Financial Capability Resource Centre (UK)]
* [http://www.mymoney.gov/ Financial Literacy and Education Commission (US)]
* [http://www.understandingmoney.gov.au/ Understanding Money] is the Australian financial literacy website by the Financial Literacy Foundation (Australia)
* [http://www.moneysense.gov.sg MoneySense] is a website set up byMonetary Authority of Singapore to boost Financial Literacy inSingapore
* [http://www.bgsu.edu/smms Student Money Management Services] was developed byBowling Green State University in Bowling Green, Ohio to increase financial literacy for undergraduate and graduate students.Further reading
* “Improving Financial Literacy - Analysis of Issues and Policies” OECD 2005
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