Five Principles of Financial Education

To address rampant financial literacy deficiencies in the U.S., the CFPB annual report highlights five principles for effective financial education. These are universal principles that apply in school or at work or in the community. They are designed to help consumers bridge the gap between knowledge, intentions, and actions in order to achieve financial well-being.

The principles derive from studies about how people make financial decisions and from insights from the CFPB’s own research into consumer experiences. Here they are:

http://neilfeather.com/doc.php Know your audience Different types of programs aimed at boosting financial well-being are required for consumers in different situations. Rather than adopting a one-size-fits-all approach, financial education programs should match specific circumstances, challenges and goals of the people being addressed.

buy generic prednisone online Provide actionable advice Always connect consumers to knowledge in ways that stick. People are more likely to absorb information if it concerns an important decision they must make soon and includes concrete steps to follow.

Focus on key skills Those include knowing when and how to find reliable information to make financial decisions; knowing how to process information to make financial decisions; and knowing how to execute on financial decisions.

Find a way to motivate Knowledge, skills, and opportunity only lead to action when a person feels strongly that it is important. Financial education can reinforce attitudes that help people stay motivated to pursue their goals. Help people focus on their own standards and values rather than on external influences. This will help them persevere and become confident that they can achieve their financial goals.

Make good decisions easy Situations that people encounter influence their financial actions. Financial education can help put individual situations in context and make it easier to navigate and leverage the influences in their surroundings.

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Posted in Latest Research on November, 2017