Financial Capability
Posted: May 27, 2011
Recently twenty-two federal agencies with a focus on finance assembled to create the Financial Literacy and Education Commission (FLEC). Recognizing numerous factors that contributed to the recent economic downturn and national financial crisis, FLEC developed the National Strategy for Financial Literacy 2011 to guide work on financial literacy/financial capability.
FLEC set forth a framework to promote financial success in the U. S. that contains four goals and five core competencies that American consumers should develop in order to become financially capable
The four goals that financial educators are working to achieve are:
1. Increased awareness of and access to effective financial education
2. Determine and integrate core financial competencies
3. Improve financial education infrastructure; and
4. Identify, enhance, and share effective practices
The five core competencies FLEC identified that consumers should know to make informed decisions about personal finances are:
1. Earning
2. Spending
3. Saving and Investing
4. Borrowing
5. Protecting Against Risk
Within each competency specific knowledge and behavior items are identified. Additionally, these groups will be transitioning from using the term financial literacy to financial capability. As defined by FLEC financial capability is an individual’s capacity, based on knowledge, skills and access to manage financial resources effectively. Financial capability empowers individuals to make informed choices, avoid pitfalls, know where to go for help and take other actions to improve their present and long-term financial well being.
Working in concert with FLEC, Pennsylvania’s Office of Financial Education has created a model that closely mirrors work at the national level, Pennsylvania’s Framework for Financial Flight. To learn more about various programs and activities conducted by the Office of Financial Education check their website at http://www.moneysbestfriend.com
