Digitizing Financial Literacy?

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Last month, the National Foundation for Credit Counseling released its annual Consumer Financial Literacy Survey. The results added a bit of color to the picture that has been emerging since the recession of Americans’ financial literacy and stability, and it’s not necessarily pretty. According to the latest survey, more than half (56%) of adults do not have a household budget, and 22% of those individuals say they do not track their spending. In 2011, 28 percent of adults reported not paying their bills on time, but in 2012, that proportion rose to one-third (33%) of Americans not paying their bills on time. When it comes to savings, the bright spot is that more than half (59%) of survey respondents indicated that they were putting aside savings. The bad news is that proportion dropped from 67% in 2010. In addition, a full 39% do not have any retirement savings.

This, of course, is a straightforward survey, not a study designed to explore the reasons behind America’s state of financial literacy and saving habits or determine correlation or causality. But it can certainly be useful, especially in assessing the need for services to help Americans become more financially literate.

There is an array of local financial literacy programs supported by cities across the country, from the professional financial coaching provided through New York City’s Financial Empowerment Centers to Seattle-King County’s Financial Education Providers Network. Given the importance of family financial stability to local economic vitality, city leaders should continue to champion financial literacy programs and connect residents to these valuable resources. But there is also a growing set of web-based financial literacy supports that represent a whole new opportunity for Americans to improve their financial capabilities. In a world increasingly turning to technology, is financial literacy something we can effectively digitize? Will it have the same impacts – and can we measure them effectively – as person-to-person financial coaching? Then there’s the issue of whether or not residents will have the ease of access, to say nothing of the motivation and accountability needed, to ensure robust and meaningful participation in digitized efforts to improve financial literacy.

Some cities are forging ahead and leveraging web-based financial literacy tools in their financial education and empowerment efforts. The City of Houston, for example, created an iPhone app for its Bank On Houston initiative that will help users (ideally, previously underbanked residents) get a better handle on their money. This endeavor was supported by the Improving Data Collection in Municipal Bank On Initiatives project sponsored by NLC’s Institute for Youth, Education and Families.

Bank On DC, a program led by the Mayor’s Office of Planning and Economic Development, has incorporated an online tool called MyStartingPoint into its financial education offerings for Bank On customers. Created by the Washington, D.C.-based Community Financial Education Foundation, the web-based MyStartingPoint program is free of charge and open to any user.  The program identifies a user’s current state of financial wellness and then customizes a learning path based on her financial “starting point.” It provides access to all kinds of interactive resources, including budgeting tools, checklists, calculators, financial worksheets, savings tips, credit tips and credit resources.

HelloWallet is another online tool that is drawing the attention of some cities working in the financial empowerment space. While not free of charge, HelloWallet is a robust and innovative online personal finance tool. The company also has a growing community-based portfolio in which it donates free access to HelloWallet to qualified community groups, and is currently partnering with Bank On programs in Washington, D.C., and Los Angeles, with several others in the works. HelloWallet is an interesting tool because it was created with the goal of “democratizing access to honest, high-quality financial guidance.” It’s a bit like having a personal financial planner, in digital form.

Technology is certainly an intriguing tool for financial literacy, with both great potential but also its own set of shortfalls. Regardless, it seems important that experts at all levels-local, state and national-should be invested in finding solutions to the current deficiencies in Americans’ financial capabilities.