San Diego, CA. - John W. Snow, now former U.S. Secretary
of the Treasury, recently issued the first report of The
National Financial Literacy and Education Commission.
The commission was created under the Department of the
Treasury by an act of Congress. It was Title V of the
Fair and Accurate Credit Transactions Act (FACTA)
President Bush signed into law on December 4th, 2003.
The law charged the commission, made up of 20 federal
agencies to improve the financial literacy and education
of persons in the United States through the development
of a "National Strategy". Some excerpts of the Quick
Reference Guide are below.
The Executive Summary lists the usual benefits of
financial education. "Help people own a home, live a
comfortable retirement, finance an education, avoid
fraud and generally make the most of the numerous
choices afforded by our modern market- place of
financial products and services. However uninformed
choices can be dangerous. That is why the ultimate goal
of this Strategy is to empower individuals to choose
wisely."
"The Strategy recognizes that the infrastructure of
financial education can only be erected with the
cooperation of three builders: the government, the
private sector and the individual. Each of these
"builders" has its role. The government can regulate the
financial marketplace and provide information for
consumers. The private sector, including for-profit and
non-profit organizations, can use its expertise,
resources, and positioning to provide financial literacy
programs. Individuals can take an interest in managing
their finances and use the information and programs
provided by the government and private sector to improve
their lives and those of their loved ones.
No one of these groups can succeed in assembling a
financial education system alone. Yet mere cooperation
without coordination is not enough. Therefore all three
of these players must work together to assemble a
national infrastructure for financial education under a
common blueprint. The Strategy provides such a
blueprint. The Strategy's blueprint is firm enough to
give general direction, but flexible enough to allow
different players to chose their own roles in enhancing
financial education. The Strategy is a blueprint that is
intended for the private sector, individuals, and
government. The private sector can use the Strategy's
definition of the challenges and the best practices as
tools to focus and design future efforts. Individuals
can use some of the resources listed to better manage
their financial affairs. Government policymakers can use
the Strategy to frame their analyses on financial
literacy matters.
Each chapter recommends one or more Calls to Action -
proposals for next steps for further development of our
financial education infrastructure. Most of the
proposals call upon the Federal government to take steps
to raise the level of financial literacy. Some of these
proposals call upon the private sector to expand their
involvement in financial education. Other proposals
suggest steps individuals should take for themselves to
enhance their financial knowledge."
Purpose
Beyond meeting a statutory requirement, there are three
major purposes to the Strategy. First, the document is
designed to identify issues within the field of
financial education. This will assist policymakers and
practitioners alike as they assess the national level of
financial literacy. Second, the Strategy proposes
solutions -- in some cases by suggesting specific steps
and in other cases by offering examples of programs with
features that should be replicated by organizations
wishing to spread financial literacy. Third, the
Strategy seeks to advance the national conversation on
financial education. Improving financial literacy
requires first awareness and then action in government,
in the private sector, and among individuals. Therefore,
the Strategy is designed to serve as a discussion piece,
an action plan, and, in time, a rallying point for those
advocating for greater financial literacy in America.
Structure and Organization of the Strategy
In developing the Strategy, the Commission focused on 13
different topics for addressing the wide range of
financial issues Americans face.
Topic Areas
The Strategy contains 13 subject-specific chapters. The
Strategy begins with an examination of general savings
issues in Chapter 1. To transform the time-honored
American dream of owning one's own home into an
achievable reality, Chapter 2 of the Strategy addresses
the topic of homeownership. As Social Security benefits
alone may not allow Americans to maintain their
pre-retirement financial standing, Chapter 3 addresses
the need to properly attend to their future financial
well being.
Chapters 4 through 7 of the Strategy address important
financial applications such as credit, consumer
protection, taxpayer rights, and investor protection.
Chapters 8 through 10 focus on key audience sectors that
require targeted financial education, including the
unbanked and multicultural populations, and K-12 and
postsecondary students.
Finally, chapters 11 through 13 of the Strategy address
important organizational and logistic topics, such as
program evaluation and improvement, coordination
efforts, and the international perspective.
Each chapter contains an overview of the topic, a
discussion of the challenges and issues specific to that
topic, and illustrations of potential solutions to
address those challenges. Additionally, each chapter
concludes with one or more calls to action which are
keyed to one or more of five basic tactics for financial
literacy, listed below.
Overviews
Each chapter begins with an introduction to the current
landscape of the respective topic. This section will set
the stage for an in-depth treatment of the subject
matter. The overviews discuss recent developments in
that subject area, describe economic impacts of the
current situation continuing as the status quo, and
provide quantitative data from secondary research that
illustrates the current state of affairs in a tangible
way.
Challenges
While the Overview frames the discussion, the Challenges
section actually paints the picture of the problems
Americans are having with this financial topic. Only
when such challenges are accurately identified can
effective solutions be proposed.
Issues and Solutions
The Issues section looks at the challenges identified in
the previous section through the lens of financial
education. This section then describes actual financial
education programs that help Americans meet these
challenges. The Federal government programs are
mentioned so readers can make use of them to assist with
their financial affairs. The non-Federal government
programs are discussed generically as illustrations of
programs that are effectively addressing the topic of
the chapter. These programs are included as models for
those readers wishing to establish or improve their own
financial education programs.
While the essential elements of the cited programs are
described in the respective chapters of the Strategy,
the programs' names are not listed (with the exception
of Federal government programs). Readers wishing to
learn more about any of the programs listed can find the
name of the program and contact information in this
document - the Treasury's Quick Reference Guide. By
listing programs by name, the Quick Reference Guide
gives the reader the ability to research each of these
programs for further information on the initiative
described or to directly reach out to the organizers of
the program.
Calls to Action
Each chapter of the Strategy calls for specific actions
to improve financial literacy for all Americans. Each of
these Calls to Action may be directed to the Federal
government, the private sector, or to individuals. The
26 Calls to Action identify concrete steps that should
be undertaken to meet the challenges identified in that
chapter. Each Call to Action is associated with a tactic
or tactics described below. These five tactics occur in
different combinations and are broad methods or
approaches for addressing the various financial
education issues described in the chapter. In the
Strategy, each Call to Action is found at the end of its
respective chapter. A complete list of all the Calls to
Action is included in the Quick Reference Guide.
As referenced above, the Commission found certain
fundamental approaches to improving financial literacy
that cut across subject areas. These five specific
tactics are considered the "Who, What, Where, When, and
How" of raising the level of financial literacy for all
Americans. The tactics are essential to replicating the
success of the programs cited and to implementing the
Strategy's Calls to Action.
For the complete, detailed commission report, please
visit:
http://www.mymoney.gov/pdfs/ownership.pdf
For the Quick Reference Guide of commission report,
please visit:
http://www.mymoney.gov/pdfs/QuickRefGuide.pdf