Financial Education and Training: Empowering Your Financial Future

April marks Financial Literacy Month, a time to highlight the importance of financial education and encourage the pursuit of financial health for everyone. I’d love to reflect on where we stand on financial literacy and safety.

According to Standard & Poor’s Global Financial Literacy Survey, 57% of adults in the U.S. are financially literate. The country ranks 14th worldwide on basic financial skills, behind Australia, Canada, Denmark, Finland, Germany, Israel, and other countries, which had 61% or higher rates of financial literacy. These numbers are consistent across generations.

As we celebrate Financial Literacy Month, it’s the perfect time to create a plan for financial success. Here are some of the things that require our immediate attention:

Start Them Young, But Don’t Leave the Old Out

It’s easy to identify the roots of Americans’ financial literacy crisis. 75% of American teens need more confidence in their personal finance skills. After all, only 23 states in the U.S. require financial literacy in high schools!

Ill-equipped to manage their finances from childhood, we often grow up to become awful at it. The lack of financial education has led to a financial challenge of epic proportions in the country. Americans have racked up a staggering $800 billion in credit card debt . Although 3% of adults between ages 40 to 49 had credit card debt, compared to 5% among ages 18 to 29, the adults had vastly different problems. According to a recent poll, 85% of adults had poor retirement budgets and were stressed about retiring.

Sure, there is a dire need to instill strong personal finance management skills in young individuals. At the same time, adults of all ages require education, resources, and tools to manage their personal finance and financial goals effectively.

Brands Need to be More Financially Responsible Towards Their Customers

Thanks to innovations like embedded finance, new businesses have become sources of financial services for customers. Buy-now-pay-later, POS lending, integrated insurance services, fintech-as-a-service, embedded car payments, etc. have become increasingly accessible to consumers. However, their widespread availability only sometimes translates to a better customer financial situation.

Fintech lending, for instance, has its own set of problems to deal with: unscrupulous fintech lenders, cyber fraud and cybercrime, poor to no data protection, compliance issues, non-existent consumer protection legislations, and so on, which continue to plague fintech borrowers. Brands should do more to navigate this increasingly complex space skillfully and ensure their customers are not falling victim to these risks. At the same time, consumers should hold these brands accountable for their role in the embedded finance ecosystem so that businesses’ bottom lines are directly tied to their role in their consumers’ financial wellbeing.

A Bottom-up Approach to Protect Society’s Most Disadvantaged Groups

The income disparity between different groups in the U.S. is well-documented. However, minorities aren’t the only disadvantaged groups in the U.S.

Across the board, large enterprises offer their employees far superior financial guidance and financial resources, including employee pension contributions, insurance coverage, pay flexibility, and more, compared to small businesses. This puts small business employees at a severe disadvantage in contrast to their counterparts in large enterprises.

Small businesses are creating the overwhelming majority of jobs in the U.S. (12.7 million jobs vs. 7.9 million by large enterprises between 1995 to 2020), which makes this issue even more significant. It’s now a national crisis. The top reasons for small businesses to ignore employee financial inclusion, financial education, and benefits include:

• Too busy handling day-to-day operations to care about employee perks and benefits
• Overestimation of the costs of additional benefits on employers
• Lack of knowledge or understanding of the government assistance available to employers in delivering employee benefits, like the SECURE Act, the American Rescue Plan Act, the Paycheck Protection Program, small business tax credit programs, SBA debt relief, and 50+ other programs.

Interestingly, trust in employers is globally higher than in NGOs, governments, and media. Therefore, if employers take proactive steps to encourage their employees towards financial inclusion and offer them better benefits, employees would be likely to take advantage of these measures.

Of course, that raises the question: why should small businesses, which are generally stressed, worry about their employees’ financial status? Well, a shocking 78% of employees feel detached and distracted at work due to stress from their worsening financial situation. So, it makes sense for small businesses to invest in their employees’ financial security and mental health.

Match the Financial Education and Support to Context and Need

While financial education is a broad topic with many dimensions, only some have the time, availability, and need to learn every aspect of personal finance management. It should be tailored to the respective audiences. Findings from a study into plummeting financial health among different demographics are highlighted in the table below.

The lowest income groups predictably had the least percentage of financially healthy families, and the situation has only worsened for this group. These are likely individuals who live paycheck-to-paycheck. Education on portfolio management, stocks, and bonds, is likely the least relevant for them. Instead -debt management, monthly budgeting, savvy saving tips, etc. would deliver more meaningful results.

The Last Leg: Taking Financial Education and Inclusion to Audiences

Financial education should first start with organizations that are best equipped to offer it. However, as fintech and embedded finance solutions are disassociating consumers from traditional banking and finance institutions, brands and businesses across the spectrum will be required to join the efforts to realize financial inclusion where previously it was assumed to be a responsibility of the major financial institutions and public corporations.

Mandatory financial education beginning in high school should be a requirement for all. I think back to teaching basic economics, budgeting, and balance sheet topics via volunteer programs in public schools in various locations I have lived and worked in over the years. However, this is far from a requirement and default in educational institutions. Simultaneously, state governments, federal governments, and large financial institutions should take steps to educate small business owners, their HR departments, and their employees regarding the government assistance programs that help businesses deliver better employee benefits at lower costs to the company.

Food For Thought

Proactive financial education and inclusivity programs by banks and fintech companies, and active participation by the private sector can help the growing majority of Americans stuck in financial nightmares.

Celebrating Financial Literacy Month provides a fantastic opportunity for them to embark on their financial education journey. Understanding, observing, and addressing the unique needs of different age and income groups will empower people to take control of their financial future.

— Christina shares candid insights and ideas based on her work, network and passion for mobile, payments and commerce. She focuses on the latest innovations from products and growth to people during the day while teaching students and mentoring entrepreneurs at night. Connect with her on?LinkedIn ?or?Twitter or at upcoming Events . All views are my own. —

Article originally published on?Medium