Policy Options to Improve Financial Education

Sorting through credit card offers, deciding how to invest retirement funds in the stock market, picking the right mortgage from a myriad of options, deciding how to save for a child's college tuition—the scope and diversity of the financial decisions a family has to make has grown exponentially. Former Federal Reserve Chair Alan Greenspan observed, "Today's financial world is highly complex when compared with that of a generation ago. Forty years ago, a simple understanding of how to maintain a checking and savings account at local banks and savings institutions may have been sufficient. Now, consumers must be able to differentiate between a wide range of financial products and services, and providers of those products and services." (Greenspan, 2003).

The lack of sufficient information needed to make good financial decisions is a problem for many families up and down the income scale. But the consequences are particularly acute for families with lower incomes and fewer resources. Financial education needs to be taught to both children and adults to help fill this knowledge and skills gap.

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