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Promote Youth Financial Literacy

With high levels of consumer debt, low savings rates and increasing bankruptcy rates, policymakers and community leaders are becoming more aware of the importance of supporting financial literacy.  Because economic downturns often force families to make difficult decisions about their finances – ensuring that people have the best possible skills and information to make those decisions is critical.  This is particularly important for low-income youth - who are disproportionately impacted by economic circumstances that make it even more difficult to manage their finances and build assets.[1] 

Low-income youth are less likely to have access to financial education and financial opportunities, which is a contributing factor in growing income and asset inequality. There is an increasing need to create opportunities for low-income youth to develop financial knowledge and skills, to access mainstream banking, to obtain educational opportunities and to access work and job training. 

State policymakers play an important role in helping low-income youth develop financial literacy and stability.  Policies that increase access to financial education, promote saving and building assets, promote economic success through educational attainment and workforce development, and build partnerships with local community organizations and financial institutions are all ways to significantly impact the financial literacy, capability, and stability of low-income youth.  


[1] Gray, A. (2007).  Asset-Building and Financial Education Programs for Youth Transitioning Out of Foster Care.  Connected by 25 and the Finance Project. Retrieved from http://www.f2f.ca.gov/res/TFPSBAsset.pdf

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According to the Financial Literacy Council Establishment Act of 2008, financial literacy is “the ability to make informed decisions about one’s personal finances, based on an understanding of the principles of credit, debt, savings and investments, depository institutions, interest, and budgeting."

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While there are various definitions of financial education, consistent elements include: “(1) being knowledgeable, educated and informed on the issues of managing money and assets, banking, investments, credit, insurance and taxes; (2) understanding the basic concepts underlying the management of money and assets (e.g., the time value of money in investments and the pooling of risks in insurance); and (3) using that knowledge and understanding to plan, implement, and evaluate financial decisions.”