Financial Literacy Strategies : Where Do We Go From Here?

The evolution of market economies has dramatically broadened the opportunities of consumers, workers, investors, and firms. Financial services have become especially free and accessible, but also increasingly complex. For the new financial freedom to help most people, they must understand their choices and the likely implications of alternative decisions. Unfortunately, many Americans have a weak grasp of basic personal finance principles. This paper emphasizes the importance of financial literacy in an increasingly complex market economy and examines the current state of financial education in the U.S. and abroad. We explore two methods of delivering financial knowledge—through broad financial curriculums and through more focused “teachable moments.” After examining the pros and cons of each, along with the evidence about their effectiveness, we suggest that a combination of the two perspectives, with the specific topics and behavioral strategies varying by target audience. We conclude by calling for a more rigorous evaluation of the effects of existing programs.