Financial literacy is the ability of individuals to make appropriate decisions in managing their personal finances. Raising levels of financial literacy is now a focus of government programmes in countries including^[1] Australia, Japan, the United States and the UK. The 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 the UK, the alternative term “financial capability” is normally used: the Financial Services Authority (FSA) in the UK started a national strategy on financial capability in 2003. The US Government also established its Financial Literacy and Education Commission in 2003. The examples and perspective in this article or section may not represent a worldwide view. ... The Organization for Economic Co-operation and Development (OECD) is an international organization of those developed countries that accept the principles of representative democracy and a free market economy. ... The Financial Services Authority (FSA) is an independent non-departmental public body and quasi-judicial body that regulates the financial services industry in the United Kingdom. ...

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 a social marketing campaign.^[2] Social marketing is the application of commercial marketing concepts and techniques to target populations so as to achieve the goal of positive social change. ...

United Kingdom

The current UK strategy involves the FSA spending about £10 million a year^[3] across a seven-point plan. The priority areas are:

• New parents
• Schools (a programme being delivered by pfeg)
• Young Adults
• Workplace
• Consumer communications
• Online tools
• Money advice

A baseline survey^[4] 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.”^[5]

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 ^[6] in 2006. The United States Department of the Treasury is a Cabinet department, a treasury, of the United States government established by an Act of U.S. Congress in 1789 to manage the revenue of the United States government. ...

Notes

1. ^ ”Taking Ownership of the Future: The National Strategy for Financial Literacy” US Financial Literacy and Education Commission, 2006, page 113
2. ^ Preliminary task force recommendations 2004
3. ^ “Financial capability in the UK: Delivering Change”, Financial Services Authority, 2006, page 1, ISBN 1-84518-418-1
4. ^ “Financial capability in the UK: Establishing a Baseline”, Financial Services Authority, 2006, ISBN 1-84518-419-X
5. ^ “Financial capability in the UK: Establishing a Baseline”, page 3
6. ^ “Taking Ownership of the Future”, Financial Literacy and Education Commission, 2006

External links

• FSA National Strategy for Financial Capability Resource Centre (UK)
• Financial Literacy and Education Commission (US)
• Financial Literacy Foundation (Australia)
• OECD financial education project

Further reading

• “Improving Financial Literacy - Analysis of Issues and Policies” OECD 2005