Financial Capability & Literacy
Financial capability and literacy is “the capacity, based on knowledge, skills, and access, to manage financial resources effectively.”1 This set of skills can help youth achieve financial well-being, which happens when they can fully meet current and ongoing financial obligations, feel secure in their financial future, and are capable of making decisions that allow them to enjoy life.2 Financial education is how youth can learn these skills through a variety of resources and programming.
Today’s youth face a financial marketplace that is more complex than the one faced by previous generations. A recent study found that millennials have greater financial concerns than older generations:
- 55 percent of millennials with student debt worry that they will not be able to pay off their debt, and
- almost 50 percent are concerned that they have too much debt in general (i.e., credit cards).3
Financial capability is knowing how to spend wisely, manage credit, and plan for the future. Financial capability is an effective way to help youth, no matter their circumstances, avoid common financial vulnerabilities and build economic stability.4 Youth should be educated about finances early in life and at pivotal points in their development and financial lives.5 Having a higher financial literacy early in life is associated with:
- less credit card debt,
- higher savings rates,
- and fewer personal bankruptcies.6
As they approach high school graduation, students and their caregivers will make important decisions about whether to pursue higher education and if so, how to face the reality of paying for it. Additionally, youth who do not attend college or trade school directly after high school will more quickly face financial responsibilities as adults.7 These early choices can have a long-lasting impact on their financial well-being.
Brochures and Fact Sheets from the Consumer Financial Protection Bureau (CFPB)
This website provides a list of the CFPB’s brochures, bookmarks, fact sheets, fliers, worksheets, and posters that can be downloaded or ordered in bulk. Many of these publications are available in multiple languages.
This website can help youth manage their money, understand credit, identify scams, and prevent theft.
Money Smart for Young People
The Federal Deposit Insurance Corporation (FDIC) offers Money Smart, a financial education curriculum designed to teach basic financial topics to people with low- and moderate-levels of income. Tools are available for different age groups and in nine languages.
This website contains financial education resources for young people, caregivers, and educators. It is organized around the My Money Five principles: spend, earn, save and invest, protect, and borrow.
Quick Tips for Managing Your Money (from the FDIC)
This web page provides strategies and practical guidance to help young adults and teenagers with borrowing, saving, banking, and avoiding scams.
1 U.S. Department of the Treasury, 2010
2 Consumer Financial Protection Bureau, 2015
3 Mottola, 2014; millennials are born between 1978 and 1994
4 Consumer Protection Financial Bureau & U.S. Department of Health and Human Services, Administration for Children and Families, 2014
5 Center for Financial Security, 2012
6 Bernheim, Garrett, & Maki, 2001
7 McCormick, 2009