2006

The National Strategy for Financial Literacy

Taking Ownership 

of the Future

Taking Ownership 

of the Future

Taking Ownership 

of the Future

2006

The National Strategy for Financial Literacy

Members 

Department of Agriculture

Department of Defense

Department of Education

Department of Health and Human Services

Department of Housing and Urban Development

Department of Labor 

Department of the Treasury

Department of Veterans Affairs

Commodity Futures Trading Commission

Federal Deposit Insurance Corporation

Federal Reserve Board 

Federal Trade Commission

General Services Administration

National Credit Union Administration

Office of the Comptroller of the Currency

Office of Personnel Management

Office of Thrift Supervision

Securities and Exchange Commission

Small Business Administration

Social Security Administration

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Taking Ownership of the Future

The National Strategy for Financial Literacy

Table of Contents

Foreword, Part I: Taking Ownership of the Future . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . v

Foreword, Part II: Illustrative Programs . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . xiii

Chapter One: General Saving . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 1

1. Shifting Public Discussion from Consumption to Saving through 

Public Awareness Campaigns . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 2

2. Using Existing Tax Incentives to Make Saving More Convenient 

and Affordable . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 4

3. Tailoring Communications to Make Saving Relevant to Everyone . . . . . . . . . . . 5

Chapter Two: Homeownership . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 9

1. Using Grassroots Approaches to Deliver Counseling and 

Training Programs . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 10

2. Highlighting Success through Quality Education and 

Public Awareness . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 13

3. Community Collaboration Can Be Invaluable in Developing 

and Distributing Programs . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 15

Chapter Three: Retirement Saving . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 19

1. Educating Workers on All Retirement Saving Opportunities . . . . . . . . . . . . . . 21

2. Encouraging Retirement Saving for Employees of Large Firms . . . . . . . . . . . . 24

3. Retirement Saving Options for Employees of Small Businesses . . . . . . . . . . . . 27

4. Taking Advantage of Tax-Preferred Individual Retirement Saving Products . 28

Chapter Four: Credit . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 31

1. Increasing Public Understanding of Credit, Credit Reports, and Credit Scores . . . . 33

2. Using Reputable Credit Counseling Services . . . . . . . . . . . . . . . . . . . . . . . . . . . 35

Chapter Five: Consumer Protection . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 41

1. Educating Consumers about Reducing their Risk of Identity Theft . . . . . . . . 42

2. Guarding against Fraudulent Business Opportunities . . . . . . . . . . . . . . . . . . . 45

3. Safeguarding Senior Citizens from Targeted Consumer Threats . . . . . . . . . . . 46
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Chapter Six: Taxpayer Rights . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 49

1. Helping Individuals to Identify and Utilize Available Programs and Services ...50

2. Education and Outreach to Individuals and Employers . . . . . . . . . . . . . . . . . . 53

3. Reducing Taxpayer Risks and Costs by Encouraging Direct Deposit . . . . . . . 55

4. Taking Advantage of Important, New Benefits to Realize Financial Saving . . 56

Chapter Seven: Investor Protection . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 59

1. Equipping Consumers with Unbiased, Neutral Investment Information . . . . 60

2. Encouraging Greater Understanding of Investment Characteristics, 

Particularly Fees . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 63

3. Protecting Investors from Fraud through Increased Education Efforts . . . . . 64

Chapter Eight: The Unbanked . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 67

1. Using Banking Industry-Driven Products and Services 

to Increase Understanding and Utilization . . . . . . . . . . . . . . . . . . . . . . . . . . . . 68

2. Encouraging Collaboration and Use of Existing Relationships 

to Increase Familiarity with Financial System . . . . . . . . . . . . . . . . . . . . . . . . . . . 70

Chapter Nine: Multilingual Multicultural Populations . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 75

1. Promoting Participation in the Financial Services Process 

through Increased Understanding of the System . . . . . . . . . . . . . . . . . . . . . . . 76

2. Changing Perceptions about the Accessibility of Homeownership . . . . . . . . . 78

3. Improving Access to Financial Services . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 79

Chapter Ten: Kindergarten – Postsecondary Financial Education . . . . . . . . . . . . . . . . . . . . . . 83

1. Finding Room for Financial Education in K-12 Curricula 

through Integration . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 84

2. Providing Teachers with Training and Support to Effectively 

Teach Financial Education Topics . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 88

3. Providing Teachers with Effective Financial Literacy Materials, 

Curricula, and Resources . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 89

4. Increasing Financial Literacy by Reaching Youth in 

Non-Traditional Educational Venues . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 90

5. Increasing the Financial Skills of Postsecondary Students . . . . . . . . . . . . . . . . 93

Chapter Eleven: Academic Research and Program Evaluation . . . . . . . . . . . . . . . . . . . . . . . . . 97

1. Encouraging Academic Research . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 98

2. Program Evaluation Utilizing Proven Quantitative Analysis . . . . . . . . . . . . . . 100

3. Program Evaluation Utilizing Qualitative Evaluation . . . . . . . . . . . . . . . . . . . 102
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Chapter Twelve: Coordination Efforts . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 107

1. Coordination of Federal Information on Financial Literacy . . . . . . . . . . . . . 108

2. Assessing Federal Resources and Avoiding Duplication and Redundancy . . 109

Chapter Thirteen: International Perspective . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 113

1. Approaches within Other Nations and Cross-Border Efforts . . . . . . . . . . . . . 114

2. Encouraging Global Partnerships . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 118

Acronyms . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 121

Appendix A: Meeting Summaries . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 125

Appendix B: Federal Register Notice . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 139
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Foreword, Part I: Taking Ownership of the Future

Foreword, Part I

Taking Ownership of the Future

The Financial Literacy and Education Commission

Today’s increasingly complex financial 

services market offers consumers a vast 

array of products, services, and providers 

to choose from to meet their financial 

needs. While this degree of choice 

provides consumers with a great number 

of options, it also requires that they be 

equipped with the information, knowledge, 

and skills to evaluate their options and 

identify those that best suit their needs 

and circumstances. This is especially the 

case for populations that have traditionally 

been underserved by our financial system.

Financial education also is essential to help 

consumers understand how to prevent 

becoming involved in transactions that 

are financially destructive, how to avoid 

becoming victims of fraud, and how 

to exercise their consumer protection 

rights. Financial literacy can empower 

consumers to be better shoppers, 

allowing them to obtain goods and 

services at lower cost. This optimizes 

their household budgets, providing 

more opportunity to consume and save 

or invest. In addition, comprehensive 

education can help provide individuals 

with the financial knowledge necessary 

to create household budgets, initiate 

savings plans, manage debt, and make 

strategic investment decisions for their 

retirement or their children’s education.

Having these basic financial planning 

skills can help families to meet their 

near-term obligations and to maximize 

their longer-term financial well being.

In 2003, Congress established the Financial 

Literacy and Education Commission 

(the Commission) through passage of 

the Financial Literacy and Education 

Improvement Act under Title V of the Fair 

and Accurate Credit Transactions (FACT) 

Act of 2003 (P.L. 108-159). Congress 

designated the Treasury Department’s 

Office of Financial Education to lend its 

expertise and provide primary support to 

the Commission, which is chaired by the 

Secretary of the Treasury. In addition to 

the Treasury Department, the following 

Federal agencies are represented on 

the Commission: The Federal banking 

agencies (as defined in Section 3 of the 

Federal Deposit Insurance Act)—the 

Office of the Comptroller of the Currency 

(OCC), the Board of Governors of the 

Federal Reserve System (FRB), the Federal 

Deposit Insurance Corporation (FDIC), 

and the Office of Thrift Supervision 

(OTS)—the National Credit Union 

Administration (NCUA), the Securities 

and Exchange Commission (SEC), 

each of the Departments of Education, 

Agriculture (USDA), Defense (DOD), 

Health and Human Services (HHS), 

Housing and Urban Development (HUD), 

Labor (DOL), and Veteran Affairs (VA), 

the Federal Trade Commission (FTC), 

the General Services Administration 

(GSA), the Small Business Administration 

(SBA), the Social Security Administration 

(SSA), the Commodity Futures Trading 

Commission (CFTC), and the Office 

of Personnel Management (OPM).
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Congress charged the Commission 

to “improve the financial literacy and 

education of persons in the United States 

through development of a national 

strategy to promote financial literacy and 

education.” The statute also provides for 

a yearly re-examination of the progress of 

that strategy. This document represents 

the first step in the evolutionary process 

of crafting and refining a framework 

for a national strategy for improving 

the financial literacy and education of 

Americans. Under the terms of the statute, 

the Commission will annually review the 

National Strategy and make changes and 

recommendations as it deems necessary.

Title V, Section 514 of the FACT Act 

states, in part, that the strategy “shall 

provide for participation by state and local 

governments and private, nonprofit, and 

public institutions in the creation and 

implementation of such strategy.” This 

mandate recognizes that both the private 

sector and the public sector are essential 

to improving financial literacy in America.

In adherence to this mandate, the 

Commission sought input from financial 

education providers and examined 

resources of the Federal, state, and local 

governments, nonprofit organizations, 

academia, and the private sector.

The Commission has met as a body every 

four months since it was established in 

January 2004, inviting representatives from 

an array of financial education sources 

to present information on particular 

programs to inform the Commission 

membership. The Commission also called 

for public comment on August 26, 2004, 

and in response, over 150 individuals 

and organizations replied. In an effort 

to obtain more information and detail 

from these respondents, the Commission 

held six sector-specific public meetings, 

inviting those who had submitted written 

comments to present more information.

Many used their own resources to 

travel to Washington, D.C. to attend 

these meetings and others were able to 

participate by telephone. The Commission 

is grateful to the participants for their 

thoughtful comments and willingness to 

share knowledge and opinions. Both the 

Federal Register notice and the summaries 

of these meetings are included in the 

Appendices to the Strategy. Many of the 

elements in this Strategy document were 

contributed by meeting attendees.

It is clear that there is a myriad of ongoing 

financial education efforts within the 

United States, targeting a wide variety 

of topics and audiences and employing 

various strategies to deliver financial 

education. Some of the efforts that 

the Commission identified represent 

background research that was instrumental 

in developing a framework for the 

National Strategy. Sponsored by Federal, 

state, and local government agencies, 

private entities, nonprofit organizations, 

and institutions of higher learning, these 

and many other programs respond to 

the financial literacy and education 

needs of many different segments of our 

population. One fundamental challenge 

to improving financial education centers 

on reaching those who lack the awareness 

of the availability of such resources, 

who may not have the time to improve 

their level of financial education, or for 

whom existing information resources are 

inaccessible or inadequate. Americans may 

be unable to take advantage of existing 

educational resources for a variety of 

reasons, including lack of Internet access, 

language barriers, or because they are 

not the targets of traditional methods 

of dissemination. One major and overarching goal of the National Strategy, then, 

must be to make it easier to access and use 
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Foreword, Part I: Taking Ownership of the Future

helpful, appropriate, and timely financial 

education information, in a format 

most useful to the intended recipient.

Another challenge that represents an 

opportunity for the Commission is helping 

Americans discern the difference between 

financial education and marketing.

Occasionally, a company may try to 

deliver financial education in marketing 

materials for financial products or services.

This may blur the distinction between 

the sales information and the important 

financial literacy points. That blurring 

may make it more difficult for consumers 

to evaluate products and determine if 

the information is accurate and complete 

or whether the provider is unbiased or 

whether the information provided is 

clouded by potential financial gain.

This is not a simple task. Personal financial 

management is an extremely complex 

matter that requires significant resources 

and commitment by consumers to 

understand and evaluate the multitude 

of products available in the broad 

financial services market. In addition, 

the marketplace is constantly changing, 

with new products, services, and providers 

emerging to meet consumer demand. As 

a result, the range of topics and issues that 

consumers must evaluate is vast and evergrowing. Financial education efforts should 

aim at helping consumers understand and 

select the products and services that best 

suit their needs, goals, and circumstances.

Providing effective financial education 

presents great challenges not only because 

of the complexity of the issues surrounding 

the need for financial education, but also 

the individualistic nature of the approach 

necessary to address those issues. As a 

result, another goal of the National Strategy

is to help consumers identify reliable 

and unbiased sources of information 

and equip them with the skills needed to 

choose reliable products and services.

Given the important role of financial 

education in promoting financial 

well-being, there is a long-standing 

commitment to financial education 

from government, private industry, and 

nonprofit organizations. Marshaling that 

commitment and organizing efforts to 

produce the best possible result is the 

greatest challenge of all, and one that can 

be addressed through a national strategy.

The Commission has concluded that an 

effective national strategy must encompass 

four crucial areas, set forth below. Future 

evaluations of this strategy will focus upon 

reviewing progress in and refining the 

articulation of these major strategic areas.

1. Building Public Awareness of Available 

Resources

Improved financial literacy among all 

Americans requires an increased public 

awareness of the issues, as well as the 

many state, local, and national resources 

that are available for financial education.

One theme that emerged from the 

Commission’s sector-specific meetings 

was the realization that the Federal 

government must make its financial literacy 

resources more easily available. This is 

important in order to better leverage 

existing financial education resources 

and avoid overlap or duplication.

The Commission has established an 

information distribution infrastructure 

which will help increase public awareness 

of the resources available within the 

Federal government by establishing 

MyMoney.gov, a clearinghouse for 

financial literacy materials. This Web site 

contains links to free financial literacy 

and educational materials produced by 

Commission members. MyMoney.gov 
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also provides links to selected .edu sites 

maintained by publicly funded colleges 

and universities affiliated with the USDA 

Cooperative State Research, Education, 

and Extension Service (CSREES), as well as 

.org sites affiliated with government entities 

such as the Federal Reserve Banks, to 

ensure that valuable financial information 

and learning tools are available from sites 

beyond Federal government agencies.

The goal of the MyMoney.gov Web site 

is to provide a convenient and accessible 

source for credible and free resources. The 

Web site now contains useful information 

for individuals who are facing an array 

of financial needs, such as balancing 

a checking account, shopping for a 

mortgage or auto loan, researching ways 

to pay for a college education, reviewing 

credit card statements, putting money away 

for retirement, understanding a credit 

report, or simply deciding whether to pay 

cash or to charge a purchase. It contains 

information on how to understand, 

evaluate, and compare financial 

products, services, and opportunities 

and assists investors in understanding 

how to proceed when they encounter 

difficulties with market intermediaries.

Although the Web site is arranged to be 

accessible and helpful to consumers, it 

also will make it easier for community 

educators and nonprofit organizations 

to find and use those same resources, 

reducing costs of needless duplication.

An immediate byproduct of the 

establishment of MyMoney.gov has been 

to more clearly identify the financial 

literacy resources that are currently 

available from Commission members.

This important step will facilitate each 

Commission member’s analysis of whether 

there are areas of needless overlap and 

duplication within this body of financial 

education materials. Existence of the 

Web site, with materials arranged by 

subject matter instead of by Commission 

member, will greatly facilitate coordination 

of efforts to promote financial literacy.

Creation of the Commission has brought 

into focus the fact that financial literacy 

involves a multiplicity of issues that 

must be addressed. The Commission 

meetings, public comments, and sectorspecific gatherings have highlighted the 

range of issues that are involved. Each 

Commission member has unique areas 

of expertise and will promote the various 

facets of financial literacy that fall within 

the expertise that resides in each agency.

As additional materials are developed 

and linked to from MyMoney.gov, each 

Commission member can learn from and 

build upon the shared expertise of others.

The Commission also has established 

a toll-free number, 1-888-MyMoney, to 

disseminate a variety of educational 

materials found on the Web site to 

those who are unable or unwilling to 

use the Internet. By establishing one 

central source for all of these financial 

literacy and education materials, the 

Federal government can ensure that 

consumers and educators alike have 

easy access to accurate, up-to-date, 

and easy-to-find information and 

resources on financial matters.

Congress has charged the Secretary of the 

Treasury with developing, implementing, 

and conducting a pilot national public 

service multimedia campaign to enhance 

the state of financial literacy and education 

in the United States. This multimedia 

campaign will be an integral part of the 

strategy for raising public awareness of the 

importance of the issue and for informing 

Americans about where they can obtain 

high-quality, timely information on a wide 

variety of financial issues. This campaign 

will be an effective tool to actively market 
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Foreword, Part I: Taking Ownership of the Future

the MyMoney.gov Web site and the 1-888-

MyMoney toll-free number. By using direct 

and creative messaging, an effective media 

campaign can help establish MyMoney.

gov and 1-888-MyMoney as the primary 

portals to which consumers can turn when 

they need to easily find financial education 

materials on a wide range of important 

financial topics. Using this multimedia 

strategy, we can begin to build national 

awareness of the many valuable, free 

resources that are available to all citizens.

2. Developing Tailored, Targeted 

Materials and Dissemination Strategies

Fortunately, a large variety of excellent 

financial education materials exists. The 

MyMoney.gov Web site catalogs a great deal 

of neutral, unbiased information aimed 

at educating consumers, enabling them 

to obtain materials that can assist them 

in making informed financial decisions.

Rather than creating new teaching 

materials, these existing materials and 

resources can be tailored for particular 

audiences and distributed through 

those organizations and dissemination 

channels that are most trusted within 

individual communities. A single-source 

Web site, like MyMoney.gov, can help 

educators maximize their use of free 

financial education resources and 

eliminate needless duplication of effort.

Improving the financial literacy of 

Americans is not an action that occurs 

through a one-size-fits-all approach.

People learn in many different ways, and 

many of us benefit from hearing and 

seeing educational messages repeated 

in many different ways on different 

occasions. Effective financial literacy and 

educational efforts require materials that 

reach and are clearly understood by the 

intended audience. Tailored, targeted 

resources are important to reach key 

demographics, including unbanked 

populations, multicultural and multilingual 

communities, geographically remote 

communities, and consumers with special 

needs. It is important to appreciate that 

dissemination channels differ widely 

according to the message and intended 

recipient, and what may appear to be 

duplication of effort is often necessary in 

order to reach different target audiences.

Needless duplication occurs only when 

educators and others are unaware of 

the existence of useable information.

Developing a wide variety of effective 

channels is an important facet of the 

financial literacy challenge. Information 

can be disseminated in many settings, 

including the workplace, schools, media, 

and through community organizations.

Each venue offers valuable outlets for 

reaching different demographic sectors.

A challenge to financial education 

efforts is understanding that access to 

information and programs does not always 

result in positive consumer behavior.

For example, the workplace can be an 

important channel in dissemination of 

effective financial information. Access to 

an employer-based retirement plan offers 

an essential mechanism to facilitating 

structured savings. However, the availability 

of such a plan does not correlate to high 

participation in such plans. In 2004, only 

53.4 per cent of all full-time employees 

participated in an employer-sponsored 

retirement plan. In recognition of this, 

in 2006, the Treasury Department and 

DOL will co-host a roundtable with large 

employers on retirement saving. Topics will 

include successful strategies in integrating 

the delivery of financial education into the 

workplace and other options for increasing 

participation and contributions in private 

pensions, such as automatic enrollment. In 
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addition, the SBA, DOL, and the Treasury 

Department are committed to conducting 

outreach to small businesses, and will 

continue to offer valuable resources on 

retirement options to small firms. The SBA 

will make available specific information 

for small businesses on general retirement 

issues by providing and online training 

link that will be available on MyMoney.

gov by the second quarter of 2006.

Another key component of the financial 

literacy challenge is to integrate financial 

education into established curricula 

for elementary, secondary, and postsecondary learning institutions. Identifying 

opportunities to incorporate financial 

education in this manner can help young 

Americans grow into financially educated 

adults who are astute consumers and 

who, in turn, impart this knowledge to 

their children. This kind of financial 

education can result in better household 

budgeting and other critical life skills.

To help educators convey financial 

education concepts as part of core subjects 

such as math and reading, the Treasury 

Department and the Department of 

Education will partner to host a summit 

focused on financial education integration, 

teacher training, and related topics.

Financial issues and education vary across 

cultures, and acquiring an understanding 

of these differences is critical to 

increasing the role of minority markets 

in areas such as transaction accounts 

and homeownership. For some, there is 

a lack of trust of banks and government 

agencies. Others have varying attitudes 

toward spending and saving, and may 

use intra-cultural financial mechanisms 

such as peer lending and investing groups 

within their communities. Still others may 

adhere to religious restrictions, such as 

the Islamic prohibition on the payment 

of interest. In some communities, such 

as Native American reservations and 

ethnically concentrated neighborhoods, 

there may not be an abundance of 

financial institutions. These communities 

seek specific strategies to help them 

better secure the financial services 

resources, while gaining the products, 

underwriting, and delivery mechanisms 

that are culturally compatible.

Community organizations can play an 

important role in efforts to enhance the 

delivery of financial education information.

For example, technology and innovation 

have resulted in the creation of a plethora 

of mortgage loan products that are 

complex and possess features that may be 

inappropriate, very risky, and financially 

detrimental for some consumers, such as 

adjustable rate mortgages and interest-only 

loans where payment levels can change 

dramatically over the term of the loan.

In addition, as the mortgage lending 

market has become more competitive and 

prolific, the emergence of unscrupulous 

lenders has created concern regarding 

predatory lending practices. While some 

regulatory and legislative interventions 

have been undertaken to thwart predatory 

lending, financial education is a critical 

component of protecting homeowner 

equity. Community-based programs 

can be effective in both promoting 

and preserving homeownership. Local 

homeownership initiatives can raise 

awareness and move many individuals 

and families closer to making the dream 

of homeownership a reality. Similarly, 

intervention at a community level for 

homeowners in financial difficulty can 

help mitigate the effect of predatory 

lending for consumers and communities.
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3. Tapping into Public-Private and PrivatePrivate Partnerships

Improving the nation’s financial literacy 

is not a task that can be undertaken 

solely by the Federal government. To 

the contrary, the majority of financial 

education and skills-building activities 

are those currently led by private-sector 

organizations. Community involvement 

can greatly enhance the effectiveness of 

collaborative resource development and 

dissemination efforts. Public-private and 

private-private partnerships therefore 

play an important role in equipping 

consumers with needed financial skills.

Successful partnerships can efficiently 

reach key audiences with high-quality, 

unbiased information. These partnerships 

can highlight the local successes of 

financial literacy efforts and boost local 

enrollment in and access to education 

programs. Partnerships are valuable 

components to any public awareness 

effort initiated by the Commission, and 

collaboration is a key part of the National 

Strategy to improve financial literacy.

The area of homeownership is just 

one of many in which public-private 

partnerships can be particularly effective.

Between the second quarter of 2006 

and the first quarter of 2007, HUD will 

join with the Treasury Department to 

host a series of meetings highlighting 

the work of successful partnerships 

that have advanced homeownership.

Partnerships within communities can be 

effective at addressing the issues involved 

with the many individuals in this country 

who do not maintain traditional bank 

transaction, credit, savings, or investment 

accounts. The Treasury Department, 

along with the FDIC, the NCUA, and the 

OCC, will host a series of four regional 

conferences to share best practices on 

banking of the unbanked. The conferences 

will take place between the second quarter 

of 2006 and the third quarter of 2007 

and will bring together community-based 

organizations, financial service providers, 

and Federal, state, and local regulators to 

broker partnerships and discuss the latest 

developments and strategies in bringing 

people into the financial mainstream.

Partnerships have also been effective at 

encouraging wealth building. Several 

Commission members are among multiple 

nonprofit groups, employers, financial 

institutions, and government agencies who 

are working in cooperative partnerships 

at the local, state, or national levels 

to encourage saving among low- and 

moderate-income individuals. Government 

participants include the FRB, OCC, SEC, 

DOL, and CSREES, the Federal partner 

in the Cooperative Extension System.

4. Research and Evaluation of Financial 

Education Programs

While many excellent financial education 

efforts are ongoing throughout the 

nation, a theme repeatedly sounded in 

public comment letters and during the 

Commission’s sector-specific meetings is 

that a systematic method of evaluation 

of financial literacy programs does not 

exist. Additionally, there is little research 

on successful methods for financial 

education. A broad and deep base of 

research on financial education will 

assist policymakers, as well as public 

and private sector providers of financial 

education, to improve the effectiveness 

of their work on financial literacy. While 

some good research has been conducted, 

more can be done. From research comes 

a shared body of knowledge on how 

to best inform and educate different 

and varied constituencies on financial 
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education topics. Such research is essential 

in developing and replicating programs 

that are proven to achieve results and to 

ensure the efficient use of resources.

Ideally, financial education programs 

would strive to incorporate findings 

from academic research that utilize both 

qualitative and quantitative measures 

to assess the effectiveness of financial 

education programs. For consumers, these 

data will offer confidence about programs 

that work; for educators, the data will 

offer guidelines for developing evidencebased, quality materials; and for funders 

of financial education, research provides 

assurance of the optimization of resources.

To raise awareness of existing academic 

research and to define what still needs 

study, the Treasury Department, along 

with the USDA and CSREES, will 

convene a symposium of researchers 

who specialize in financial education.

The symposium will result in a working 

paper which will survey current financial 

education research and also will identify 

areas of potential future research.

Conclusion

The United States is not the only country 

in the world to be engaged in a serious 

analysis of the financial literacy and 

educational needs of its citizens. Virtually 

every other nation faces the same challenge 

to increase the financial knowledge and 

skill set of citizens to enable them to make 

better financial decisions and avoid fraud.

As the process of developing National 

Strategy continues, it will be important to 

continue a dialogue with other nations 

in an effort to learn from their efforts.

Reaching the goal of a financially 

educated population will take time, 

but the Commission is encouraged 

by the many excellent programs and 

partnerships currently working to 

improve American financial literacy 

levels. Part II of this Foreword contains 

descriptions of representative programs 

now in place across America. Of necessity, 

this National Strategy contains merely 

a small sampling of the many fine 

programs in existence today. Yet each 

of the programs described illustrates 

the multitude of smaller efforts that 

represent opportunities for learning and 

partnership in contributing to the larger 

national mosaic that comprises America’s 

financial literacy and education effort.
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Foreword Part II

Illustrative Programs

The Financial Literacy and Education Commission

Established to improve financial literacy 

and education among all Americans, 

the Commission was created when 

the Financial Literacy and Education 

Improvement Act under Title V of 

the FACT Act (P.L. 108-159) was 

signed into law by President George 

W. Bush on December 4, 2003.

The Commission was charged by the 

U.S. Congress to “improve the financial 

literacy and education of persons in the 

United States through the development 

of a national strategy to promote 

financial literacy and education.”

The principal duties of the 

Commission include:

1. Encouraging government 

and private sector efforts to 

promote financial literacy;

2. Coordinating financial education 

efforts of the Federal government;

3. Developing a national strategy 

to promote financial literacy and 

education among all Americans;

4. Establishing a national financial 

education Web site to provide 

a coordinated point of entry 

for information about federal 

financial literacy, education 

programs, and grants; and

5. Establishing a toll-free hotline 

available to the public seeking 

materials on issues pertaining to 

financial literacy and education.

Programs Discussed in this Report

In each of the 13 chapters included in 

the National Strategy, the Commission 

delved into issues, many identified 

by Congress, pertinent to financial 

education. Each chapter describes 

various financial education programs 

developed and managed by nonprofit 

organizations, academia, the Federal, state, 

and local governments, and the private 

sector. The “Calls to Action” identified 

at the end of each chapter represent 

opportunities for improving financial 

literacy and education in that particular 

area. Appendix A represents some of the 

Commission’s background research into 

opportunities and challenges surrounding 

financial education that formed the 

development of the National Strategy.

The Commission took great efforts to 

include all points of view in the deliberative 

process, including the following:

First, on August 26, 2004, the 

Commission issued a notice in the 

Federal Register with a request for 

comments on the National Strategy.

In response to that notice, more 

than 150 comments were received 

from private citizens, nonprofit 

organizations, academia, Federal, 

state, and local agencies, and others.

Second, the Commission conducted 

six sector-specific public meetings 

to gather more information from 

respondents to the August Federal 

Register notice. These meetings 

•

•
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were held in various locations in 

Washington, D.C., between February 

25th and March 17th, 2005. Both 

the Federal Register notice and 

the summaries from the sectorspecific meetings are contained in 

the appendices of the Strategy.

Finally, the Commission convened 

a working group of 13 Commission 

agencies to provide significant 

input into the Strategy, drafted 

by the Treasury Department.

Working group representatives 

met on eleven separate occasions 

between June of 2004 and June of 

2005 at the Treasury Department 

to discuss timelines, structure, 

and content of the document.

Title V, Section 514 of the FACT Act 

states, in part, that the Strategy “shall 

provide for participation by state and 

local governments and private, nonprofit, 

and public institutions in the creation 

and implementation of such strategy.” 

This mandate recognizes that both the 

private sector and the public sector are 

essential in improving financial literacy in 

America. In adherence to this mandate, 

the Strategy examines and discusses 

financial education resources from the 

Federal, state, and local governments, 

and from private sector providers.

The Treasury Department considered a 

variety of the non-Federal government 

programs that it learned about 

in one of the following ways:

a. The programs were cited by 

a respondent to the Federal 

Register notice on August 26, 

2004, which requested public 

comment on financial education 

resources for the National 

Strategy. The comment period 

•

closed October 31, 2004. Or,

b. The programs were recommended 

by organizations in response 

to outreach by the Treasury 

Department to promote a 

broad sampling of programs.

The non-Federal government programs 

that are discussed in the report were found 

by the Treasury Department to contain 

at least six out of the following eight 

elements, which were developed by the 

Treasury Department's Office of Financial 

Education in 2003, in which the program:

1. content focuses on basic 

savings, credit management, 

homeownership and/or 

retirement planning.

2. content is tailored to its 

target audience, taking into 

account its language, culture, 

age, and experience.

3. is offered through a local 

distribution channel that makes 

effective use of community 

resources and contacts.

4. follows up with participants 

to reinforce the message and 

ensure that participants are 

able to apply the skills taught.

5. establishes specific goals and 

uses performance measures 

to track progress toward 

meeting those goals.

6. demonstrates a positive impact 

on participants’ attitudes, 

knowledge, or behavior 

through testing, surveys, or 

other objective evaluation.

7. can be easily replicated on a 

local, regional, or national 

basis so as to have broad 
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impact and sustainability.

8. is built to last as evidenced 

by factors such as continuing 

financial support, legislative 

backing, or integration into an 

established course of instruction.

The purpose of including these nonFederal governmental programs was 

to give specific, concrete examples of 

financial education efforts that specifically 

illustrate the issues discussed in each 

chapter. The United States Government, 

including the Financial Literacy and 

Education Commission and its member 

agencies, does not endorse the non-Federal 

governmental entities referenced in this 

report, nor does it guarantee in any way 

the services, advice or products provided 

by non-Federal governmental entities 

mentioned in this report. Reference in this 

report to any specific financial institution, 

commercial product, process, or service 

does not constitute an endorsement, 

approval, or recommendation by the 

United States Government, including 

the Financial Literacy and Education 

Commission or any of its member agencies, 

nor does it certify or indicate that nonFederal governmental agencies mentioned 

in this report—or any of their services, 

advice or products—are in compliance 

with or satisfy requirements of, applicable 

laws or regulations. With regard to the Web 

site addresses that appear in this report 

that are created and maintained by nonFederal governmental entities, the United 

States Government, including the Financial 

Literacy and Education Commission and 

its member agencies, does not endorse, 

approve, certify, or control those external 

sites and does not guarantee the accuracy, 

completeness, efficacy, or timeliness of 

the information contained on these sites.

Moreover, the programs described 

in the Strategy are, by no means, an 

exhaustive list of programs that have a 

positive impact on financial literacy, and 

are intended to be used for illustrative 

purposes within the topical chapters.

1

Chapter 1

General Saving

Overview

Savings provide the ability to reach 

important life goals such as financing 

homeownership and a college education, 

coping with unexpected events, and 

preparing for retirement. Even a 

small amount of savings can grow and 

compound over time, contributing to 

the financial security we all seek.

As a nation we have seen a marked decline 

in personal savings. Thirty-five years ago, 

9.4 percent of disposable income was set 

aside for savings.

1

 In 2004, the comparable 

figure was 1.3 percent.

2

 Alan Greenspan, 

former Chairman of the Board of 

Governors of the Federal Reserve System, 

said the following about the importance 

of personal saving: “A key component 

of domestic saving in the United States 

in future decades will be the path of the 

personal savings rate. That rate will depend 

on a number of factors, especially the 

behavior of the members of the baby-boom 

cohort during their retirement years.” 3

Challenges 

While many reasons account for the 

United States’ current personal saving 

situation, it is clear that, for many 

Americans, this is a complex issue that 

requires deep understanding of individual 

situations and decision-making. For some, 
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the challenge is about the value of personal 

saving early in life. For others, it requires 

careful planning. And for still others, it 

demands a better understanding of the 

skills and mechanisms needed to save.

Moreover, it is important that Americans 

have the information, 

knowledge, and skills to 

identify their saving goals 

(e.g., saving for future 

education expenses, a 

down payment on a home, 

retirement, etc.) and then 

select the instruments and 

products they can use to 

help them attain those 

goals. With increased 

education on the benefits 

of saving, Americans 

can achieve a greater 

understanding of the 

importance and benefits of 

saving, as well as the strategies that support 

systematic saving and wealth accumulation.

Issues in General Saving

1. Shifting Public Discussion from 

Consumption to Saving through Public 

Awareness Campaigns

There is a great deal of competition for 

a modern family’s income. Each month, 

the average family writes checks for rent 

or mortgage, childcare, and utilities.

Couple those monthly expenses with 

outlays for transportation, food, clothing, 

tuition bills for children, student loan 

payments, and expenses for the care 

of aging parents, and families are left 

with limited discretionary income.

When deciding how to allocate 

discretionary income, families are faced 

with strong and persuasive messages that 

encourage them to spend their money.

By comparison, families may receive 

little information and encouragement 

about saving. Knowing the “how” and 

“why” of saving can equip Americans 

with the tools to make wise choices when 

allocating what often are limited 

discretionary resources.

Part of building savings is 

protecting those savings through 

the use of insurance. When 

planning their saving and other 

financial matters, individuals 

should budget funds to insure 

their health, home, auto, and 

life. In this way, Americans 

can reduce the likelihood that 

one catastrophic event will 

wipe out a lifetime of saving.

Through integrated massmedia public awareness efforts, 

Americans can learn more 

about the benefits of saving. The issue of 

saving is a crucial one for all Americans, 

and public service announcement 

(PSA) campaigns can help many 

understand the importance of saving.

By communicating directly with people, 

using communication channels that have 

earned their trust and with which they 

are familiar, and by developing messages 

that in form, format, and function they 

are comfortable with, PSA campaigns 

can educate the nation on the benefits 

of personal saving and the specific 

steps each individual and family can 

and should consider taking. Such PSAs 

might involve short segments on radio 

and television, distributing materials 

via the Web and community-based 

locations, or hosting other educational 

activities. These campaigns should be 

ongoing, providing the public with 

information and follow-up over time.
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Across the nation, there are 

individual programs, both private 

and public, using PSA campaigns 

focused on the topic of saving.

National PSA Multi-Media Campaign

One national PSA campaign uses the 

full spectrum of media across the 

nation — including television, radio, 

print, the Web, transit rail and bus 

ads, conferences, and more to carry 

the message of saving. The campaign 

is designed to focus public attention 

on what is needed to achieve financial 

security and promotes the idea that 

saving today is vital to a secure financial 

tomorrow. Since 1997, the campaign has 

secured more than $20 million worth of 

donated airtime to broadcast the PSAs.

The program is just one part of this 

organization’s efforts to raise public 

awareness on the actions individuals 

need to take to facilitate their long-term 

personal financial independence. This 

not-for-profit national coalition of publicand private-sector institutions works 

through its partners to educate Americans 

on all aspects of personal finance and 

wealth development, including credit 

management, college saving, home 

purchases, and retirement planning.

Local/National PSA Campaign 

and Saving Program

While traditionally PSA campaigns provide 

information to the public, some PSA 

campaigns prompt individuals to take 

action and get involved. For instance, in 

2001 the citizens of an Ohio city were 

initially targeted by a local public awareness 

campaign that encouraged and assisted 

less affluent Americans to save and build 

wealth. Now the saving campaign reaches 

a national audience and includes more 

than 50 local and national initiatives of 

for-profit, nonprofit, and government 

organizations that target specific groups, 

such as African Americans, Hispanic 

Americans, military personnel, faithbased groups, and young Americans.

Not only does the campaign feature 

public service announcements, but it 

also delivers information and services to 

encourage people to enroll as “savers.” 

Each saver must commit to working toward 

a monetary goal with a specific plan that 

includes monthly deposits in a specified 

account. In return, savers receive free 

information about saving strategies and 

accounts, a quarterly newsletter, and access 

to advice from certified financial planners.

These saving public awareness programs 

are offered and supported by more than 

1,000 organizations, including more 

than 100 financial institutions which 

are offering no- or low- balance savings 

accounts to those registered savers. As a 

result of their efforts, more than 30,000 

Americans have enrolled as savers, and 

hundreds of thousands have sought 

savings information from the program.

Public Awareness Week on 

Importance of Insurance

Greater public awareness about the 

importance of insurance can reduce the 

likelihood that one catastrophic event will 

wipe out a lifetime of savings. This national 

association promotes its annual public 

awareness week which focuses on how to 

help consumers avoid fraud in purchasing 

insurance, review insurance coverage 

levels, utilize their state’s insurance 

departments, and talk to their insurance 

providers about possible discounts. In 

2004, 45 states and the District of Columbia 

participated in this public awareness 
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campaign delivered through television 

and radio, as well as through dedicated 

phone banks where consumers could 

ask questions and voice concerns.

In a recent survey, 72 percent of Americans 

indicated that they have the right amount 

of insurance coverage, but only 32 percent 

indicated that they understood the 

details of those policies “very well.” 4

 

Thus, the public awareness campaign 

focuses on meeting this need 

by giving consumers important 

information about insurance.

Summary

PSA campaigns represent one method 

of raising public awareness in ways that 

help Americans to develop and maintain 

a saving mindset. Through carefully 

planned and executed PSA campaigns, 

the American public can gain a better 

understanding of the value of saving, 

the specific steps to take in order to 

achieve personal saving goals, and the 

benefits that come from a lifetime of 

reasonable saving. Public awareness 

campaigns also can bring together a 

variety of organizations that target specific 

groups and offer concrete opportunities 

for individuals to become savers.

2. Using Existing Tax Incentives to 

Make Saving More Convenient 

and Affordable

In decades past, passbooks and piggy 

banks represented saving plans. Saving 

money is an activity that requires 

forethought, planning, specific activities, 

and responsibility, and is often undertaken 

without a known, specific “pay off” in 

the end. While spending is often seen as 

convenient and affordable, is an exercise 

in patience and tenacity with a view 

of achieving — or preparing for — a 

better future or paving the way to handle 

unexpected crises or emergencies.

To build wealth, simple lessons about 

saving are the most important to convey.

Even a small amount of savings today 

can compound into resources for 

tomorrow. Such resources can provide the 

financial security and flexibility to handle 

unexpected events, while simultaneously 

offering the means for meeting future 

financial needs and planning. 

In their efforts to save more, Americans 

should use the full spectrum of available 

savings products and tools. Saving 

tools are broader than just passbooks 

and piggy banks. As the public and 

private sectors continue to innovate to 

meet the growing and diverse financial 

needs of the nation, saving can be 

both convenient and affordable.

Such innovation touches all corners of 

our day-to-day lives. For instance, Health 

Savings Accounts (HSAs) and Coverdell 

Education Savings Accounts (ESAs) 

empower families to plan and manage their 

savings for specific health and education 

expenses anticipated in their future.

Health Savings Accounts 

For some consumers, HSAs are innovative 

programs to encourage personal savings 

and planning for future healthcare 

expenses. Modeled after Archer Medical 

Savings Accounts, HSAs are essentially 

savings plans to pay for health care costs.

These accounts enable tax-free payment for 

current health expenses while also allowing 

those enrolled to save for future qualified 

medical and retiree health expenses.

As an Individual Retirement Account 

(IRA) encourages retirement savings, an 

HSA encourages health care savings.

Any adult who is covered by a high-
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deductible health plan (and has no other 

first-dollar coverage) may establish an 

HSA.

5

 To encourage saving for health 

expenses after retirement, individuals 

age 55 and older are allowed to make 

additional catch-up contributions to their 

HSAs until they enroll in Medicare.

The money in an HSA is owned and 

controlled by the individual, and 

spending decisions do not require the 

involvement of a health insurer or any 

other third party. HSA holders decide 

what types of investments to make with 

their money, thereby controlling the 

growth in their HSA accounts. While 

some companies may establish HSAs for 

their employees, individuals can sign 

up for this type of account with banks, 

credit unions, insurance companies, 

and other approved companies.

Coverdell Education Savings Accounts

ESAs provide another example of an 

innovative savings product that was 

created as an incentive to help parents 

and students save for education expenses. 

Parents of students under the age of 18 

may contribute up to $2,000 per child per 

year.  The student will not owe tax on the 

distributions if, for a year, the distributions 

from an account are not more than a 

beneficiary’s qualified education expenses 

at an eligible education institution. This 

benefit applies to higher education 

expenses as well as to elementary and 

secondary education expenses.

Generally, any individual (including 

the beneficiary) can contribute to 

a Coverdell ESA if the individual’s 

modified adjusted gross income is less 

than $110,000 ($220,000 if the individual 

is filing a joint return). The $2,000 

maximum contribution per beneficiary 

is gradually reduced if the contributor’s 

modified adjusted gross income is higher. 

Distributions are tax-free as long as 

funds are used for qualified education 

expenses, such as tuition, books, fees, etc., 

at an eligible educational institution. An 

eligible educational institution includes 

any public, private or religious school 

that provides elementary or secondary 

education as determined under state law.

Summary

These examples are just two of the 

many mechanisms within the tax code 

that provide incentives for saving 

for specific future needs. Americans 

should carefully evaluate these and the 

multitude of other saving opportunities 

to determine how best to meet their 

current and future financial needs.

3. Tailoring Communications to 

Make Saving Relevant to Everyone

In addition to the broader efforts launched 

by widely distributed PSA campaigns, 

there are significant opportunities to 

utilize targeted programs that address 

individual audiences or groups of 

people. By making messages as relevant 

as possible to the individual, organizers 

can boost the effectiveness of programs.

To accomplish this, program designers 

must first determine, through market 

research, audience financial interests and 

expectations. From this data, program 

organizers can begin identifying the 

appropriate classes, materials, and 

knowledgeable experts (e.g., financial 

planners, bankers, etc.) to deliver 

information on saving to the specific 

audience. Program designers also should 

use this process to ensure that particular 

financial needs and demands are 
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addressed, while maintaining 

sensitivity to issues such 

as native language, 

Internet access, and other 

communications challenges.

Saving means different 

things to different people.

Tailored education efforts, 

such as those undertaken 

by the USDA and DoD, 

can maximize the reach 

and effectiveness of 

general saving activities.

United States Department of 

Agriculture Cooperative State 

Research, Education, and Extension Service

Rural Americans face many of the same 

challenges as those in non-rural areas, such 

as excessive credit card debt, poor financial 

planning, lack of savings for retirement and 

absence of skills for navigating a complex 

financial marketplace.  Unfortunately, due 

to distance and lack of services (including 

educational opportunities), rural residents 

may not have the same resources as 

those living in urban places.  That is why 

organizations such as the Cooperative 

Extension System, working in partnership 

with the USDA CSREES, reaches out to 

rural Americans, in addition to those in 

more populated areas, with workshops, 

home-study courses, Internet-based 

curricula and other educational methods. 

To help individuals focus on their longterm financial situations, for instance, 

the Cooperative Extension System 

established its Financial Security in Later 

Life initiative.  Through a package of 

Web-based and face-to-face programs, 

the effort encourages participants to plan 

for retirement and potential long-term 

health care costs, act to save and invest, 

and evaluate their own financial conduct 

to ensure that their actions 

are on track to achieve 

their financial goals. 

As of January 2005, 24 states 

reported 36,563 individuals 

enrolled in one or more 

of the Financial Security in 

Later Life’s eight educational 

program curricula.

6

 As 

a result, 90 percent of 

participants increased 

financial knowledge, 62 

percent planned to use 

recommended financial 

planning practices, and 48 

percent planned to manage 

their use of credit, reduce debt, and/or 

reduce household spending.

7

 A group of 

7,574 individuals who completed programs 

report a total of $6,307,708 of annual 

financial impact, such as dollars saved, 

debt reduced, or new dollars invested.

8

Military Saves

For those serving in the U.S. military, 

saving presents a unique challenge, 

particularly for junior-level enlisted 

individuals between the ages of 18 and 21.

Nearly a quarter (24 percent) of enlisted 

servicemen and women do not save at all 

and almost half only save what is remaining 

after monthly expenses, meaning they 

have no systematic saving plans in place.

That is why the DoD is developing specific 

saving programs tailored especially for 

service personnel who need to begin 

saving to prepare for their futures.

Based on a model of a consumer 

organization’s campaign, pilots of this 

social marketing effort have demonstrated 

the same level of success in motivating 

service members to reduce debt and 

establish savings for the future. Some 

of the pilot locations have proven the 
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Military Saves campaign can motivate 

service members to take action.

At one location, 50 percent of the 

audience signed up, agreeing to save 

$93,000 in the first year of saving.

Summary

Encouraging individuals to save is an 

effective message only if it reaches 

those whom it is intended to help.

Accordingly, it is critical that awareness 

and education efforts ensure that all 

materials and activities are translated 

into appropriate languages as needed 

and targeted to address the interests 

of a wide range of ages, geographic 

communities, and economic levels.

By tailoring messages and activities to 

those who need it, organizations can 

ensure that messages not only reach but 

also resonate with target audiences.

A greater emphasis should be placed 

on tailoring communications and 

education programs specifically to 

various age groups, demographics, and 

audiences. The goal is to use a multitude 

of messages and approaches so that 

each message received is relevant to 

the targeted individuals and groups.

Endnotes

1 U.S. Department of Commerce. (n.d.) National Income and Product Accounts Table. Retrieved July 

26, 2005, from www.bea.doc.gov/bea/dn/nipaweb/TableView.asp#Mid

2 Ibid.

3 Greenspan, A. (2004, August 27). Remarks at the 2004 Symposium of the Federal Reserve Bank of 

Kansas City. 

4 National Association of Insurance Commissioners. 2003 Survey. Retrieved from www.naic.org/

consumer_home.htm

5 A high deductible health plan (HDHP) is a health insurance plan with a minimum deductible of 

$1,000 (self-only coverage) or $2,000 (family coverage) in 2005. Annual out-of-pocket expenses 

Calls to Action

Tactics Employed: Public Awareness, Targeting

1-1 In the first quarter of 2006, the Treasury Department will partner with a nonprofit 

organization to develop and implement a public service announcement on the 

benefits of lifetime savings and the savings resources available on the Financial 

Literacy and Education Commission’s Web site, MyMoney.gov.

1-2 Organizations advocating for increased saving should augment their general 

communication approach with customized messages to address the interests of 

members of specific age groups, geographic communities, and economic levels. 
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(including deductibles and co-pays) cannot exceed $5,100 (self-only coverage) or $10,200 (family 

coverage) in 2005. HDHPs may have first dollar coverage for preventive care.

6 U.S. Department of Agriculture. (n.d.). Cooperative State Research, Education, and Extension 

Service. Retrieved July 26, 2005, from http://www.csrees.usda.gov/index.html

7 Ibid.

8 Ibid.
9

Chapter 2

Homeownership

Overview

In 2001, President George W. Bush said 

“...homeownership lies at the heart of the 

American Dream. It is a key to upward 

mobility for low- and middle-income 

Americans. It is an anchor for families and 

a source of stability for communities. It 

serves as the foundation of many people’s 

financial security. And it is a source 

of pride for people who have worked 

hard to provide for their families.” 1

To households, communities, and 

the nation at large, homeownership 

conveys significant economic and social 

benefits. Accordingly, for more than 70 

years, homeownership has long been an 

important public policy goal2 promoted 

by the Federal government and the 

focus of key policies and programs.

In 2004, 69 percent of American 

households owned their own homes 

— an all-time high. Homeownership 

is important to all Americans because 

it represents a significant asset for 

households. In 2001, 97 percent of all 

homeowners held at least some equity 

in their homes, with a median national 

equity value of $70,000. Home equity 

represented 42 percent of their net worth.

3

Homeownership also can be one of 

the most effective means for low- and 

moderate-income families to build wealth.

For moderate-income homeowners, 
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home equity represents 60 percent 

of net worth; and for low-income 

homeowners, it is 80 percent of net 

worth.

4

 In fact, while the net worth of a 

typical low-income household is $7,900, 

it is more than six times that, $50,000, 

for moderate income homeowners.

5

Challenges 

Despite the benefits that can accrue 

from owning a home, for a multitude 

of reasons, homeownership may not be 

in the financial best interest of some 

families. However, for those positioned 

for homeownership, it represents an 

important financial milestone and should 

be accessible to consumers for whom 

ownership is financially beneficial. Some 

Americans may view owning their own 

homes as a challenge for various reasons, 

including negative credit histories, 

daunting down payments and closing 

cost requirements, and complex loan 

transactions. For some, basic homebuyer 

education or promotion of specialized 

loan products may be all that is needed to 

help move them toward homeownership.

For others, intensive, long-term counseling 

and credit repair may be necessary.

Technology and innovation have resulted 

in the creation of a plethora of mortgage 

loan products that are complex and 

possess features that may be inappropriate, 

very risky, and financially detrimental 

for some consumers, such as adjustable 

rate mortgages and interest-only loans 

where payment levels can change 

dramatically over the term of the loan. In 

today’s highly complicated and technical 

mortgage market, the greatest challenge 

to consumers is to be equipped to evaluate 

the vast array of products and identify those 

that are most beneficial to their individual 

circumstances and financial well-being.

Further, as the mortgage lending market 

has become more competitive and prolific, 

the emergence of unscrupulous lenders 

has created concern regarding predatory 

lending practices. Through aggressive 

marketing tactics, misrepresentation, 

and fraud, such creditors strip equity 

from homeowners by entangling 

them in mortgages with terms that are 

disadvantageous to the homeowner. In 

some communities, such lending has led 

to very high rates of foreclosure and has 

resulted in financial ruin for homeowners 

victimized by predatory lenders.

While some regulatory and legislative 

interventions have been undertaken 

to thwart predatory lending, financial 

education is viewed as a critical component 

of protecting homeowner equity.

Community-based programs can 

be effective in both promoting and 

preserving homeownership. Local 

homeownership initiatives can raise 

awareness and move many individuals 

and families closer to making the dream 

of homeownership a reality. Similarly, 

intervention at a community level for 

homeowners in financial difficulty can 

help mitigate the effect of predatory 

lending for consumers and communities.

Issues in Homeownership 

1. Using Grassroots Approaches to 

Deliver Counseling and 

Training Programs

Currently, homeownership counseling 

and training programs address specific 

stages of homeownership — pre-purchase, 

post-purchase, equity extraction, and 

foreclosure mitigation. To successfully 

educate consumers on these issues, 

curricula should move beyond this 

model and be responsive to the financial 
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circumstances of borrowers and owners at 

all stages. Successful programs also need 

to address a range of other challenges, 

including language and cultural issues, 

and geographic impediments in rural 

communities. There is no “one-sizefits-all” solution to explaining how to 

achieve and maintain homeownership.

Many local or grassroots organizations are 

well-positioned to deliver homebuying 

information and counseling because of 

their familiarity with the local market.

National non-profit organizations, 

financial institutions, including credit 

unions, and housing partnerships, offer 

a variety of information and personal 

counseling to potential homebuyers.

Moreover, Federal efforts through the 

HUD’s Local Homeownership Centers 

also help families realize the potential 

benefits of homeownership and assist 

them in the home mortgage process.

NeighborWorks America® uses Grassroots 

Network to Provide Counseling

Many Americans turn to non-profit 

organizations to receive homebuying 

counseling and training that specifically 

target their local communities.

6

 

NeighborWorks America® is a national 

non-profit organization comprised 

of more than 230 resident-led, 

chartered groups operating within a 

larger nationwide coalition of local 

non-profit partnerships of residents, 

business leaders, and public officials.

This Congressionally chartered, 

Federally funded, nonprofit organization 

uses a variety of methods to increase 

support for low-income families’ access 

to homeownership, which includes 

personal counseling, homeownership 

centers, and partnerships with lending 

organizations. The organization has 

established the nation’s largest force 

of certified homeownership education 

counselors and has provided counseling 

to more than 471,000 individuals. It has 

also supported the development of 78 

Homeownership Centers throughout the 

nation. The Centers, created in 1997, 

are one-stop shops for a broad range 

of homeownership services available 

to low- and moderate-income families.

The organization also seeks to cultivate 

partnerships with the government and the 

private sector to provide affordable loans to 

potential homebuyers, and has established 

a national foreclosure prevention 

center to help address issues related to 

unscrupulous and predatory lending 

practices and to identify and prevent 

foreclosure for current homeowners.

A NeighborWorks America® organization in 

Chicago has collaborated with city officials 

and more than 20 lenders to reduce 

geographically concentrated foreclosures 

through its homeownership preservation 

initiative. Through innovative outreach, 

intensive counseling and intervention, and 

a targeted public awareness campaign, this 

organization prevented 650 foreclosures 

in an 18-month period. NeighborWorks 

America® is currently undertaking 

efforts to replicate this initiative in 

Ohio and in other communities 

beset by high foreclosure rates.

Local Credit Union offers 

First Time Homebuyer Program

For decades, financial institutions, 

including credit unions across the nation, 

have successfully delivered communityspecific counseling and training to their 

members, meeting the specific financial 

needs of the individuals and communities 
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they were established to serve. In return, 

prospective homebuyers have turned 

to credit unions to help them navigate 

the homebuying process and provide 

the services they need to 

achieve homeownership.

For instance, one such 

credit union in Maryland 

offers members a firsttime homebuyer program 

that provides step-by-step 

assistance through the 

homebuying process. To 

complement this program, 

the credit union provides 

a series of online self-help 

classes entitled Fundamentals 

of Personal Finance: Making 

Informed Choices and ongoing 

educational workshops 

and seminars, such as 

renting versus buying.

Armed Services Credit Union Serves 

Military Families

A second example is an armed services 

credit union which focuses on providing 

financial services to its unique customer 

base of more than 2.5 million members 

worldwide consisting of Navy and Marine 

Corps personnel and their families. Credit 

union staff visit their customers on Navy 

ships, and conduct over 200 general 

financial presentations annually on the 

importance of good credit, financial 

management, credit reports, maintaining 

good credit, budgeting skills, budgetary 

counseling, identity theft, and others.

The credit union also provides online 

tools, brochures, and a quarterly member 

newsletter covering issues such as money 

management, credit scores, and the 

factors that contribute to those scores. 

Native American Housing Partnership Offers 

Assistance On or Near Reservation

Public-private housing partnerships 

bring together non-profit, for-profit, and 

government sectors in a 

particular local community 

to address issues such 

as affordable housing, 

financing, and barriers to 

homeownership. Housing 

partnerships on Native 

American reservations are 

particularly situated to provide 

information and assistance 

to often remote areas in a 

way that seeks to overcome 

cultural differences. One such 

housing partnership brings 

specific grassroots programs 

and materials directly to 

the local community on 

the reservation and at the 

workplace. It seeks to improve 

understanding of homeownership issues 

and access to homeownership, including 

providing mediation for the buyer with 

tribal and other governmental authorities 

and environmental clearances.

Created to provide innovative and flexible 

homeownership financing opportunities 

on or near the reservation, the housing 

partnership empowers Native American 

families with new knowledge, skills, and 

understanding to enable families to 

build, buy, or renovate homes. Through 

the program, individuals participate 

in homebuying and financial literacy 

classes and learn how to establish 

individual development accounts.

Native American families also turn to 

the housing partnership to make first 

mortgage financing more accessible 

and to secure secondary financing 
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through down payments, closing costs, 

and principal reduction assistance.

HUD Local Homeownership Centers

Grassroots organizations also are supported 

through Federal efforts in HUD’s four 

regional homeownership centers, located 

in Pennsylvania, Georgia, Colorado, and 

California. Together, these four 

centers reach all parts of the 

country and provide current 

and prospective homeowners 

with information not only 

about the Federal Housing 

Administration (FHA) and 

its single-family mortgage 

insurance programs, but also 

non-FHA homeownership 

programs, counseling, mortgage 

servicing, and other issues 

relating to homeownership. 

Summary

Utilizing grassroots approaches to 

encourage homeownership, financial 

institutions and community organizations 

can empower all Americans to transform 

the dream of owning a home into a reality.

Through face-to-face counseling and 

targeted education programs, grassroots 

programs can help families achieve, 

maintain, and sustain homeownership.

2. Highlighting Success through Quality 

Education and Public Awareness

Successful education and public awareness 

programs are only as strong as the 

messages they deliver and the curriculum 

and instructors they use. Homebuyer 

education and awareness programs need 

to be of the highest quality and should 

be delivered by qualified instructors who 

understand the information and know how 

best to relate it to prospective homebuyers.

The credible homebuying and mortgage 

education and awareness programs seek 

to equip potential homebuyers with 

the knowledge they need to make wise 

decisions, and are not simply focused 

on selling a particular product. These 

programs highlight homeownership 

success stories, and encourage individuals 

to connect homeownership with 

investments and savings. Public awareness 

efforts, such as those created by a housing 

partnership in Ohio, deliver clear messages 

of the benefits of owning your own home, 

as opposed to renting. Moreover, education 

efforts, such as those provided by the HUD, 

certified housing counselors, and National 

Homeownership Month help promote 

successful savings and homeownership.

Housing Partnership in Ohio

In one city in Ohio, residents are learning 

how to become successful homeowners 

and gaining necessary financial skills 

from the local housing partnership.

Basing its efforts on proven successful 

programs and public education activities, 

this housing partnership has established 
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a homeownership marketing campaign 

called Fire the Landlord Now. Through 

colorful, contemporary ads placed in the 

local transit authority buses, such as “Fire 

the Landlord Now.” “Buy a lot of home for 

a little green,” the housing partnership was 

able to attract potential low- and middleincome homebuyers to its resources.

Phone calls to the housing partnership 

and the amount of homeownership 

counseling have dramatically increased.

U.S. Department of Housing and 

Urban Development

As the primary Federal agency on 

homebuying, HUD is uniquely positioned 

to help homeowners and prospective 

homeowners access quality, effective 

homebuyer education programs. To this 

end, HUD provides contact information 

for homeownership counseling services 

on a state-by-state, district-by-district 

basis through a comprehensive Internet 

resource, www.hud.gov/local/index.cfm.

(The HUD Housing Counseling agencies 

are found at this link: www.hud.gov/

offices/hsg/sfh/hcc/hccprof14.cfm.) 

States listed on the site feature their local 

homeownership events and strategies.

HUD also operates a toll-free number for 

consumers to locate a counseling agency 

in their community. Both the Web site 

and toll-free number are highlighted in 

all of HUD’s brochures and publications.

HUD created the program Neighborhood 

Networks in 1995 to encourage property 

owners to establish community technology 

centers in HUD-insured and assisted 

properties. Today, more than 1,100 

Neighborhood Networks centers help to 

improve the quality of life for residents by: 

(1) providing job training and placement, 

(2) creating employment and educational 

opportunities, (3) advancing literacy 

and language skills programs, and (4) 

providing access to healthcare information 

and other social services. The Neighborhood 

Networks’ “Train-the-Trainer” Sessions 

enable NN center directors to provide 

resources for multifamily housing residents 

and their surrounding communities. These 

individuals are trained in topic areas based 

on the resident’s needs which are identified 

through surveys of NN center clients.

National Standard for Pre-purchase 

Homeownership Education and Certification for 

Counselors and Trainers

The NeighborWorks America® Campaign 

for Home Ownership has set a national 

standard for pre-purchase homeownership 

education and established a five-day 

training and certification course for 

counselors and trainers. Trainers 

certified by NeighborWorks America®

adhere to the following standards: 

All potential homebuyers receive 

a minimum of eight hours of 

group homebuyer education with 

follow-up individual counseling; 

The housing counselors are 

certified after completing the 

five-day “Homebuyer Education 

Methods: Training-for-Trainers” 

class and passing the course exam; 

The content, delivery and format of the 

homebuyer training is tailored to meet 

the needs of the participants (rather 

than a “one-size-fits-all” approach); 

Ideally, the training and 

counseling occur before a 

purchase contract is signed; 

Customer satisfaction surveys are 

used to evaluate the effectiveness 

of the training; and 

All volunteer trainers must 

adhere to a code of ethics.

7

•

•

•

•

•

•
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National Homeownership Month 

American consumers are learning about 

the value of homeownership from leaders 

at the highest levels, including the 

President. Since 2002, President George 

W. Bush has proclaimed the month of 

June as National Homeownership Month, 

calling on the people of the United 

States to join him in recognizing the 

importance of providing all citizens a 

chance to achieve the American Dream.

During National Homeownership Month, 

Americans are encouraged to learn 

more about financial management 

and how to take advantage of the 

homeownership opportunities available 

to them in their communities. In 2005, 

National Homeownership Month stressed 

that the journey to homeownership 

involves more than simply finding a real 

estate agent and obtaining a mortgage.

National Homeownership Month featured 

a five-city tour which was a collaboration 

among twelve Federal agencies and 

showcased the numerous programs 

available to individuals. Several other 

homeownership events occurred 

simultaneously throughout the country 

during the month of June. These 

programs focused on teaching the “howtos” of buying a first home. Through this 

education effort, individuals and families 

discovered how to become homeowners, 

an important step in safeguarding their 

financial futures that also contributes 

to the overall strength of our nation.

Summary

An increased public awareness of best 

practices and successes, particularly at 

the local level, can result in increased 

understanding and acceptance of 

homeownership as a foundation for 

financial security. By linking financial 

literacy and homeownership, awareness 

efforts can promote effective strategies 

on a broader scale. Through expanded 

public education efforts and an integrated 

mass media campaign, organizations 

can expand access to the range of 

educational resources available to 

consumers, particularly by promoting 

best practices and success stories.

3. Community Collaboration Can 

Be Invaluable in Developing and 

Distributing Programs

Worthwhile education and training 

programs are only of value if the 

individuals they are intended for are 

aware of their availability and take full 

advantage of what is offered. For instance, 

many renters may not know where to 

obtain information on homeownership 

or how to get assistance in setting 

homeownership goals; thus, they need to 

be exposed to messages that will direct 

them to the appropriate programs.

Moreover, connecting the right people 

with the right financial messages can be a 

challenging task for any one organization 

to accomplish alone. For instance, one 

program may have the expertise, but 

not the on-the-ground presence. By 

partnering, organizations can pool their 

resources to achieve common objectives.

Truly successful homeownership awareness 

initiatives require collaboration among 

all sectors that target the specific groups 

that need information the most. By 

working together, public- and privatesector organizations can demystify the 

homeownership process and provide 

consumers with the tools necessary to 
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Chapter Two: Homeownership

become homeowners. Organizations, such 

as a homeownership network in Montana, 

a housing association in California, and a 

faith-based housing agency in Michigan, 

demonstrate how homeownership 

programs that target specific groups can 

serve as successful education tools.

Lenders and Government Agencies in 

Partnership in Montana Provide Counseling 

and Find Financing for Potential Homebuyers

Public and private sector organizations 

have joined together to provide Montana 

residents with the information and access 

they need to successfully navigate the 

entire homebuying and homeownership 

process. Through a system of service 

delivery partners, the organizations 

promote homeownership throughout 

184 Montana communities. Lenders and 

government agencies partner to provide 

financing for down payments and closing 

cost loans for first-time homebuyers, single 

heads of households, and families with 

a disabled member. The organizations 

also provide residents with homebuyer 

education, foreclosure prevention 

counseling, and individual counseling.

Nonprofits and Government Agencies in 

Partnership in a City in California Provide 

Housing and Savings Match Program

The government and the private sector 

have joined together to provide the 

education, training, and assistance that 

residents in a Californian city need to make 

homeownership a reality. The housing 

association in that city not only develops, 

owns, and operates affordable multi-family 

housing, but also seeks to establish strong 

and stable communities through resident 

participation and leadership development.

A key focus is to build assets — including 

both skills and wealth — of residents 

to ensure long-term self sufficiency.

Toward that end, the housing association 

established an individual development 

account program that matches the 

personal savings of residents with donated 

funds. As part of financial education 

classes, participants are required to put 

aside a small percentage of their earned 

income into savings accounts attached 

to a particular asset-building goal (e.g., 

home purchase), with a savings match 

— two-dollars matched for each one-dollar 

saved — from the housing association 

made possible through private donations.

By providing economic literacy training, 

mentoring, and asset accumulation, 

the program helps citizens realize 

their dreams of homeownership.

Housing Counseling Agency Teams with 

Faith-Based Organization in Michigan to Reach 

New Clients

Access to financial literacy information 

has become easier for residents in one 

Michigan city, thanks to a faith-based 

housing counseling agency. This housing 

counseling agency was established as an 

outreach effort through a local church, 

and it has counseled approximately 

32,000 individuals on homeownership 

through faith-based and communitybased organizations. Approximately 

6,000 of those clients have become 

homeowners with the help of this 

agency. As part of the HUD National 

Intermediary for Housing Counseling, 

this housing counseling agency oversees 

23 affiliated faith-based organizations 

that provide housing counseling 

services in Michigan communities.
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Summary

Calls to Action

Tactic Employed: Partnerships

2-1 Between the second quarter of 2006 and the second quarter of 2007, the U.S.

Department of Housing and Urban Development will join with the Treasury 

Department to host a series of meetings highlighting the work of successful 

partnerships that have advanced homeownership.

2-2 Lenders and other businesses should partner with grassroots organizations to 

provide financial education on buying a home and one-on-one counseling to 

demystify the homebuying process.

Endnotes

1 Bush, George W. (2001). Radio address by the President to the nation. Retrieved June 24, 2005, 

from http://www.whitehouse.gov/news/releases/2001/06/20010608-7.html

2 Dietz, R.D., & Haurin, D.R. (2003). The social and private consequences of homeownership. The 

Journal of Urban Economics, 54, 401-450.

3. The Federal Reserve Board. (2001). Survey of Consumer Finances. Retrieved from http://www.

Federalreserve.gov/pubs/oss/oss2/2001/scf2001home.html.

4 Ibid.

5 Ibid.

6 On April 11, 2005, Neighborhood Reinvestment Corporation began doing business as NeighborWorks 

America®. Refer to www.nw.org/network/aboutUs/history/default.asp for additional information.

7 Neighborhood Reinvestment Corporation. (2004). Creating educated homebuyers: A 

Comprehensive Approach, Written Testimony before the House Committee on Financial Services, 

Subcommittee on Housing and Community Opportunity, Washington, DC

Homeownership can be a complex process 

for the average family to understand.

Through public-private and privateprivate collaboration, public awareness 

and education programs can successfully 

deliver homebuyer education and 

counseling efforts. Partnerships between 

public and private sector organizations 

can help those individuals and families 

who are underrepresented in the 

homeownership market better understand 

how they can become homeowners.
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19

Chapter 3

Retirement Saving

Overview

Today, the retirement landscape is 

dramatically different than it was in 

previous generations. Americans are now 

living longer than in years past, health care 

costs represent a much larger proportion 

of retirement expenses, and workers 

are expected to take more individual 

responsibility for their retirement saving 

due to a shift from traditional defined 

benefit plans to defined contribution 

plans. As a result, it is more important 

than ever that Americans employ lifelong 

strategies to build retirement saving.

The average life expectancy for those 

born today is 78 years, almost a full decade 

longer than the life expectancy of those 

born in 1950.

1

 In 2002, the life expectancy 

of a 65-year-old individual rose to 83, 

while a 75-year-old person may live more 

than 11 additional years.

2

 With those 11 

years come increased health and living 

expenses that require planning. While 

seven in 10 Americans are somewhat 

confident that they will have enough 

money to live comfortably in retirement, 

only 42 percent have actually calculated 

what they will need and what they need 

to save to reach their retirement goals.

3

As the nation grows older and the 

retirement landscape continues to change, 

there is more of an impetus to properly 

plan and save for retirement. Social 
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Security continues to play an important 

part in Americans' retirement security. In 

fact, Social Security currently provides 50 

percent or more of the income for twothirds of married couples and unmarried 

persons (age 65 or older) receiving 

Social Security benefits, and is the only 

source of income for 22 percent of such 

couples and persons.

4

 For beneficiaries 

with average earnings, Social Security 

retirement benefits will replace only about 

40 percent of pre-retirement earnings.

Additionally, the Social Security system 

itself is facing challenges. With the “baby 

boom” generation preparing to retire 

soon, Social Security will be paying out 

more than it takes in by 2017 and the 

Social Security trust funds are expected 

to be exhausted by 2041.

5

 At that time, 

without changes to the program, Social 

Security will not be able to pay all 

scheduled benefits. President George W.

Bush commented on this situation when 

he said, “Social Security was a great moral 

success of the 20th Century, and we must 

honor its great purposes in this century.

The system, however, on its current path, 

is headed toward bankruptcy. And so we 

must join together to strengthen and save 

Social Security.”6

 The ongoing public 

policy discussion on the future of Social 

Security is something Americans should 

heed as they make their retirement plans.

Since its inception, Social Security has 

provided a minimum foundation of 

protection. A comfortable retirement 

usually requires not only Social Security, 

but also personal saving and saving 

from employer-based plans. In 2001, 64 

percent of all wage and salary workers 

were employed by organizations 

sponsoring pension plans.

7

 While 91 

percent of public-sector employees had 

access to a retirement plan at work, only 

60 percent of private-sector employees 

did.

8

 In 2004, only 53.4 percent of all 

full-time employees participated in an 

employer-sponsored retirement plan.

9

Such opportunities to save for retirement 

are more likely to be found in large 

firms.  Employees of firms with over 100 

employees are twice as likely as employees 

of firms with 100 or fewer employees to 

have access to and also to participate in 

a retirement plan.

10 In 2003, 42 percent 

of workers in small businesses (1-99 

employees) had access to retirement plans 

and 35 percent participated, as opposed 

to 75 percent and 65 percent respectively 

of employees in larger firms.

11

A recent study examined the saving 

and investing activity of more than 

600 employees at a major company 

considered as “low savers” — those who 

do not contribute enough to the plan to 

receive the full company match or do not 

contribute to the plan at all. The study 

found that 72 percent didn’t know how 

much they needed to save for retirement, 

but thought that they should be saving 

two-to-three times more. Despite this, 77 

percent said that they would continue 

to contribute at their current level and 

34 percent said they still did not plan 

to participate in the plan. The study 

also identified several barriers to saving, 

including lack of basic knowledge about 

their employer’s plan, discomfort with 

investing, procrastination, and debt.

12

Finally, Americans should consider 

tax-preferred individual accounts to 

save for retirement, such as traditional 

Individual Retirement Accounts (IRA) 

and Roth IRAs. Approximately 5.7 

million American taxpayers contributed 

to an IRA in 2000, while 6.8 million 

contributed to a Roth IRA.

13
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Chapter Three: Retirement Saving

Challenges 

There are many retirement saving 

challenges. These include: that life 

expectancy is increasing; that Social 

Security alone was not meant to and 

will not provide an adequate retirement 

income; that many employees do not 

have access to employer-sponsored 

pension plans and many of those who 

do are not participating; and that many 

Americans have not even 

calculated what they 

will need to save for a 

comfortable retirement.

As average life expectancy 

increases and employees 

are expected to assume 

greater individual 

responsibility to prepare 

and save for retirement, 

there is a growing 

need for increased 

public awareness of the 

importance of saving 

for retirement and the 

ways consumers can 

seek to achieve that 

goal. It is important to determine how to 

best reach and educate those groups of 

individuals who are not saving adequately 

and to develop products or campaigns 

targeted to encourage greater saving.

There are specific roles that both large and 

small employers, as well as government 

and non-profit organizations, can play 

to boost understanding of retirement 

planning and increase employee 

participation in savings options.

While the challenges are significant, 

they can be overcome by maximizing 

available opportunities and providing the 

educational programs and guidance that 

have been proven effective in practice.

Financing one’s retirement is a complex 

task, and it requires thorough planning 

and understanding of the options.

The current discussion on Social Security, 

initiated by President Bush, has raised 

awareness about the issue of retirement 

security and the need to plan for the 

future. Individuals across the country are 

engaging in discussions 

about Social Security, 

personal retirement 

accounts, and retirement 

planning. As more and more 

people come to understand 

the real problems facing 

Social Security, they also 

understand the need to take 

action to strengthen the 

system for future generations.

For effective retirement 

planning, Americans should 

focus on the roles that Social 

Security, employment-based 

retirement saving, and 

individual saving will play in 

their retirement saving.

Issues in Retirement Saving

1. Educating Workers on All Retirement 

Savings Opportunities

Millions of the Americans in the baby 

boomer generation will begin to retire 

between now and 2019. Yet only 62 

percent of American workers are saving 

for retirement.

14 Moreover, only four 

in 10 workers have taken the time and 

effort to complete a retirement needs 

calculation, which is considered the 

basic planning step designed to help 

individuals determine how much money 

they are likely to need in retirement.

15
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As retirement saving options continue 

to grow, employees need to understand 

that retirement planning involves more 

than just paying into the Social Security 

system. While a minimum foundation 

and a valuable component of retirement, 

Social Security is but one of many 

components of retirement income.

Moreover, some employees who have 

not previously saved for retirement now 

have the opportunity to make “catch up” 

contributions to their retirement plans.

Many Federal government agencies are 

partnering to improve public utilization 

of available retirement strategies and 

saving vehicles. The collective goal of these 

agency efforts is to ensure that Americans 

are aware of all of the retirement saving 

options available to them and are equipped 

to utilize these options in an effective way 

to improve their overall retirement security.

A wide range of Federal initiatives exist to 

increase public knowledge of retirement 

saving while encouraging more Americans 

to save for retirement. Among such 

initiatives are specific actions such as 

the annual distribution of the Social 

Security Statement, the National Summit 

on Retirement Savings (Saver Summit), and 

recent legislative and administrative 

changes to Federal retirement laws.

Social Security Statement

The SSA is committed to educating all 

Americans on their individual retirement 

futures by increasing public understanding 

of the basic features of Social Security and 

assisting workers in preparing for their 

long-term economic security. Through 

its annual mailing of the Social Security 

Statement, SSA provides more than 140 

million workers over the age of 25 with 

an earnings summary and estimates of 

future Social Security retirement benefits, 

explaining to all Americans the role Social 

Security can play in a worker’s retirement.

This statement allows individuals to know 

whether they have accumulated enough 

“work credits” to qualify for benefits and, 

if so, how much those benefits might be.

The Social Security Statement represents 

one of the Federal government’s largest 

efforts to communicate directly with 

Americans about Social Security and the 

need for individuals to prepare in advance 

for retirement. However, many Americans 

are not using the information to the 

fullest extent possible. In fact, a recent 

Government Accountability Office (GAO) 

survey indicates that only 66 percent of 

respondents remember receiving the 

statement.

16 To expand its educational 

reach on retirement, SSA supplements the 

information available on the statement 

with benefit calculators available at 

www.socialsecurity.gov/planners and with 

the wealth of information available at 

www.socialsecurity.gov and MyMoney.gov.

U.S. Department of Labor – National Summit 

on Retirement Savings

In the spring of 2006, the DOL will 

convene its third Saver Summit. The 

purpose of the Saver Summit is to advance 

the public’s knowledge of retirement saving 

and its critical importance to the future 

well-being of workers and families. The 

Saver Summit will facilitate the development 

of broad-based public education programs 

that (1) encourage and enhance individual 

commitment to a personal retirement 

saving strategy; (2) identify the problems 

workers have in setting aside adequate 

saving for retirement; (3) identify the 

barriers which employers, especially 

small employers, face in assisting their 

workers in accumulating retirement 

saving; and (4) examine the impact and 
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effectiveness of individual employers to 

promote personal saving for retirement 

among their workers and to promote 

participation in company savings options.

Legislative and Administrative Changes

Specific legislative and administrative 

efforts have equipped Americans with 

additional options to properly plan and 

actively save for retirement. While public 

education efforts continue to spotlight 

these positive retirement saving changes, 

many Americans remain unaware of 

these changes or do not know where 

and how to access relevant information.

Some examples of these legislative and 

administrative changes are the ability 

to make “catch-up” contributions to 

retirement plans, the DOL Advisory 

Opinion on providing financial education 

in the workplace, and the Saver’s Credit.

In recent years, the Federal government 

has promoted policy changes that 

now allow workers to build greater 

retirement savings, allow older workers 

to make “catch-up” contributions, and 

provide incentives to employers to offer 

retirement plans. The Economic Growth 

and Tax Relief and Reconciliation Act 

of 2001 (P.L. 107-16) allows individuals 

over the age of 50 to make “catch-up” 

contributions to their retirement saving 

plans while increasing IRA contribution 

limits from $2,000 to $4,500.

To encourage employers to provide 

assistance to their employees, the DOL 

has provided guidance concerning 

how employers may safely provide 

investment advice to defined contribution 

plan participants in Advisory Opinion 

2001-09A.

17 Before this opinion was 

published, many employers were hesitant 

to provide certain financial 

education materials or tools 

(such as computer programs) 

to their employees because of 

concerns regarding liability for 

providing investment advice.

Finally, the Saver’s Credit, enacted 

in 2001, offers specific incentives 

for low-income workers to save 

toward retirement. The Saver’s 

Credit provides a government 

matching contribution, in the form 

of a nonrefundable tax credit, for 

voluntary individual contributions to 

401(k) type plans, IRAs, and similar 

retirement saving arrangements.

Summary

Efforts are underway across the nation 

to increase public awareness of the 

most effective ways to plan and save for 

retirement. These initiatives attempt to 

educate Americans on the advantages 

of various saving products and on new 

options for retirement saving. Further 

education efforts aimed at increasing 

the public’s understanding of retirement 

saving should receive priority attention. 
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Vehicles for increasing knowledge about 

and boosting retirement saving include the 

Social Security Benefits Statement, Saver 

Summits, and legislative and administrative 

measures. All Americans — young, old, 

and those in between — should be aware 

of their Social Security benefits and 

should read and understand their Social 

Security Statement. This statement is an 

effective tool for retirement planning that 

provides all Americans with a snapshot 

of what they might expect during their 

retirement years from the Social Security 

system. Government agencies, financial 

organizations, nonprofit organizations 

and community-based organizations 

offer a wealth of information intended 

to help inform individuals about saving 

for retirement. Current efforts to educate 

Americans on preparing for retirement 

should be supplemented with information 

from other sources, including information 

that focuses on types of retirement saving 

vehicles and “catch-up” contributions.

2. Encouraging Retirement Saving for 

Employees of Large Firms

With the increasing popularity of defined 

contribution plans, employers are 

finding that their employees need more 

assistance in planning for their financial 

futures. Many employees look to their 

employers for guidance on whether to 

save for retirement, how to do it, and 

how to plan for the future. Employers are 

frequently viewed as a primary educational 

resource for reliable information on 

investment choices, asset allocation 

strategies, and basic retirement planning. 

Many employers meet this employee 

expectation and provide extensive 

financial education programs in the 

workplace to improve retirement saving.

In fact, some employers have been able 

to increase retirement plan participation 

rates by establishing retirement plans that 

automatically enroll workers, allowing 

them to opt-out of retirement saving 

instead of requiring them to opt in.

18

Private employers, the Federal 

government, and nonprofit organizations 

are all playing roles in distributing 

information on retirement to employees 

and in providing a foundation of 

understanding for all retirement savers.

Some private employers are also turning 

to innovative retirement savings plan 

features such as automatic enrollment to 

help employees prepare for the future.

Retirement Education Efforts – 

Private-Sector Employers

The private sector has demonstrated 

success in retirement saving education, 

equipping employees with valued 

information and services. One such 

employer provides its workers with a 

core financial education curriculum.

The curriculum includes instructorled workshops, firm- specific financial 

education software, a financial counseling 

help line staffed by financial planners and 

educators, and access to an online financial 

campus. This initiative has resulted in 

both increased 401(k) participation 

and increased contribution rates.

19

Another such employer has been offering 

similar educational programs centered on 

financial literacy training to its employees 

for many years. This firm strongly believes 

that education is a necessary component 

for integrating employer benefits with 

employee lives. Employees attend 

employer-sponsored programs such as 

Life Planning 101, Investing in Your Future, 

and Healthy, Wealthy, and Wise during 

work hours. Internal evaluation surveys 

have demonstrated that these programs 

regularly receive favorable scores.

20 
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Retirement Education Efforts – Federal 

Government as an Employer

As one of the nation’s largest employers, 

the Federal government engages in a wide 

range of education activities to prepare its 

workers for retirement and to encourage 

retirement saving. Administered by the 

Federal Retirement Thrift Investment 

Board (FRTIB), the Thrift Savings Plan 

(TSP) provides a defined contribution 

retirement system to Federal civilian 

employees, Postal employees, and 

members of the 

Uniformed Services.

To encourage saving, 

briefings and DVDs 

are made available for 

employees. Additionally, 

agency officials tasked 

with administering 

the TSP receive 

specialized training 

so they can effectively 

respond to questions.

The TSP is a tax-deferred defined 

contribution plan similar to a privatesector 401(k) plan. Generally, all Federal 

employees hired after 1983 are covered 

by the Federal Employees Retirement 

System and are automatically enrolled 

in the TSP whether or not a salary 

contribution is made. By law, all Federal 

agencies contribute an amount equal to 

one percent of an employee’s basic pay 

into his/her account each pay period.

All employee contributions are voluntary 

with the employing agency matching 

dollar to dollar the first three percent of 

pay an employee contributes each pay 

period, and 50 cents on the dollar for 

the next two percent of pay. Employees 

under the older Civil Service Retirement 

System (CSRS) may contribute to the 

TSP without any agency match.

Through the Web site www.tsp.gov, 

employees can access their accounts, use 

various saving calculators, view online 

statements, and print account-related 

forms. FRTIB also provides a toll-free 

telephone line for participants and their 

beneficiaries, conducts a communications 

effort tied to new lifecycle funds, and 

participates in the OPM-sponsored 

financial fairs for Federal employees. 

Beyond providing the TSP to its employees 

the Federal government is also attempting 

to educate the Federal 

workforce on the need 

for retirement saving and 

investment. As part of this 

effort, OPM has developed 

a retirement financial 

literacy and education 

strategy for employees. This 

effort provides workers 

with information on how 

to plan for retirement 

and calculate the 

retirement investment needed to 

meet individual retirement goals.

The OPM Federal employee retirement 

strategy is built on the belief that 

employers need to educate employees 

about employer-provided benefits while 

providing resources and guidance on 

how best to use other programs and 

efforts to achieve successful retirement.

To guide this educational process, OPM 

surveyed the Federal workforce and is 

developing a retirement readiness index 

that will help employees and employers 

better understand retirement education 

needs by benchmarking workforce 

retirement readiness. This approach could 

serve as a model, educating employers 

on issues to emphasize retirement 

saving education to employees.
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Retirement Education Efforts – Assistance from 

Non-profit Organizations

Large employers are also working with 

non-profit organizations to improve the 

retirement education being provided to 

employees. Through various initiatives 

nonprofit organizations have demonstrated 

how they can assist large private employers 

and the Federal government in providing 

employees with the financial education 

they need to plan for retirement.

Savings Fitness provides individuals 

with key information about saving for 

retirement, and was developed through a 

partnership between the DOL’s Employee 

Benefits Security Administration and a 

professional organization of financial 

service providers. This publication has 

been featured in leading national media 

and is distributed through retirement 

planning workshops and through the 

Commission’s Web site, MyMoney.gov.

Also, a professional organization of 

certified public accountants developed 

a multi-faceted program which included 

lessons on retirement. This effort takes 

a broad leadership role in educating the 

American public — from school children 

to retirees and those in between — on 

financial topics that apply specifically 

to each age group’s particular stage 

of life. Retirement saving efforts focus 

on annuities and retirement planning, 

borrowing or withdrawing money 

from a 401(k), closing a retirement 

income gap, estimating retirement 

income needs, and understanding 

defined benefit plans, among others.

Retirement Plan Feature Options – Automatic 

Enrollment Plans

To help their employees maximize 

retirement opportunities and 

effectively save for their futures, some 

large employers are implementing 

automatic 401(k) enrollment plans.

Under automatic enrollment plans, 

employees are automatically enrolled in 

the retirement saving program unless 

they actively choose not to participate.

Automatic enrollment plans differ from 

the traditional 401(k) plans that require 

workers to actively choose to participate 

in the TSP. Under the traditional optin structure of most 401(k) plans, many 

workers never choose to save in the first 

place, thereby, losing out on a sound 

saving and investment opportunity.

Additionally, many employees forfeit the 

opportunity to receive a company match 

if they fail to contribute to their 401(k) 

plans. Automatic enrollment encourages 

active involvement of employees.

With automatic enrollment, employee 

contributions, which increase gradually 

over time, are invested prudently and 

preserved for retirement, all without 

putting the onus on workers to take the 

initiative for any of these steps. Workers 

remain free to override the default options 

– choosing whether to save or not to save 

and controlling how their savings are 

invested – but those who fail to exercise 

their retirement saving are not left out.

The effects of automatic enrollment are 

distinctly positive, with studies showing 

that automatic enrollment increases 

both participation in 401(k) plans and 

the level of employee contributions.

21 

Automatic enrollment features are 

used by a number of large U.S. firms.

Summary

Employer-based financial education has 

proven effective in helping workers plan 
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and save for retirement.

22 By establishing 

their own retirement education programs 

and materials or partnering with non-profit 

education efforts, employers can help their 

employees understand their retirement 

plans and assist employees in planning and 

saving appropriately for the future. Specific 

emphasis should be placed on helping 

large employers institute innovative 

retirement plan features, such as automatic 

enrollment in 401(k) plans, to increase 

participation rates and retirement saving.

3. Retirement Saving Options for 

Employees of Small Businesses 

Many small business owners find that 

they are not familiar with the different 

retirement plans that are available to 

them, including the options specifically 

created for small businesses and designed 

to be less costly and easy to administer.

23 

For example, 73 percent of small 

business owners have never heard 

of or are not very familiar with the 

Simplified Employee Pension (SEP) 

and 52 percent have never heard of or 

are not very familiar with the Savings 

Incentive Match Plan for Employees of 

Small Employers (SIMPLE) – two plans 

that are specifically designed for small 

businesses.

24 In stark contrast, 85 percent 

of small business owners are somewhat or 

very familiar with 401(k) plans, which are 

designed for employers of all sizes, not 

specifically for small business owners.

25

The same range of communications and 

education activities available to large firms 

that have the capacity to boost employee 

understanding of retirement saving also are 

available to small businesses. Additionally, 

specific resources are available to small 

businesses for use in educating small-firm 

employees on retirement planning.

The DOL provides small business owners 

and their employees with education 

resources on retirement plan options, plan 

management, and employer responsibilities 

for operating retirement plans.

Retirement Plan Options and Management

To encourage growth in the number 

of retirement plans available, DOL, in 

partnership with a national association of 

business leaders, developed an interactive 

Web site to help small business employers 

determine the best plan option for their 

businesses. This program provides small 

businesses with information focusing 

on reasons to offer retirement plans 

to employees, considerations if a small 

business does not offer retirement 

plans, and how plans benefit both 

employees and the business itself.

To augment this site, DOL partnered with 

the IRS to develop publications about 

various types of plans such as SEPs, and 

SIMPLEs.

26 DOL also offers a series of 

seminars in conjunction with the IRS and 

a coalition of business and professional 

associations to assist small employers in 

setting up and operating their plans and 

to educate small business owners about 

their responsibilities as fiduciaries.

Summary

Helping employees better understand 

and prepare for retirement is not 

simply a task for large employers and 

the Federal government. Small business 

owners can take advantage of the tools 

above to offer retirement plans to their 

workers and can play an important role 

in encouraging and educating their 

workers on retirement planning.
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Chapter Three: Retirement Saving

4. Taking Advantage of Tax-Preferred 

Individual Retirement Savings Products 

Many Americans do not make full use of 

tax-preferred retirement saving vehicles, 

such as the traditional IRA and the Roth 

IRA. Approximately 5.7 million American 

taxpayers contributed to an IRA in 

2000, while 6.8 million contributed to a 

Roth IRA.

27 There are many benefits to 

saving for retirement in these individual 

accounts, including tax-deductible 

contributions and tax-free accumulations 

of investment earnings. With IRAs and 

Roth IRAs, for instance, families may 

plan and manage their retirement saving 

more wisely based on their future needs.

Individual Retirement Accounts (IRA) 

and Roth IRAs

A traditional IRA is a personal savings 

account that offers tax advantages to 

set aside funds for retirement. Annual 

contributions of up to $4,000 for 

individuals under age 50 and $4,500 for 

individuals age 50 or older (in 2005) are 

fully tax-deductible for workers not covered 

under employer-sponsored pensions. If 

an employee is covered by an employersponsored pension plan, that employee’s 

deduction for contributions to an IRA 

is reduced or phased out in accordance 

with the employee’s modified adjusted 

gross income. Investment earnings for all 

traditional IRA contributions accumulate 

tax-free and are not taxed until funds 

are distributed, usually at a lower tax 

rate in retirement. Withdrawls from 

traditional IRAs, made before age 59 1⁄2, 

are taxed an additional 10 percent.

In addition, the Taxpayer Relief Act of 

1997 created Roth IRAs, which differ from 

traditional IRAs in that contributions 

are made with after-tax dollars but 

earnings and distributions are tax-free.

The contribution limit to a Roth IRA 

in 2005 is $4,000 for individuals under 

age 50 and $4,500 for individuals age 

50 or older. However, as with traditional 

IRAs, an individual’s contribution 

limit may be reduced or phased out in 

accordance with his or her modified 

adjusted gross income. Withdrawls 

from Roth IRAs, made before age 59 1⁄2, 

are taxed an additional 10 percent.

Summary

IRAs and Roth IRAs provide an 

opportunity for individuals to save for 

retirement and supplement Social 

Security benefits and employer-provided 

pensions. Eligible Americans should be 

encouraged to use IRAs and Roth IRAs 

to accumulate retirement savings.
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Calls to Action

Tactics Employed: Targeting, Integration/Teachable Moment

3-1 In 2006, the Treasury Department and the Department of Labor will co-host a 

roundtable with large employers on retirement saving. Topics will include successful 

strategies integrating the delivery of financial education into the workplace and 

other options for increasing participation and contributions in private pensions, 

such as automatic enrollment.

3-2 The Small Business Administration (SBA), the Department of Labor, and the 

Treasury Department are committed to conducting outreach to small businesses, 

and will continue to offer valuable resources on retirement options to small firms.

The SBA will make available specific information for small businesses on general 

retirement issues by providing an online training link that will be available on 

MyMoney.gov by the second quarter of 2006.

Endnotes

1 Centers for Disease Control & Prevention. (2004, November 10). National vital statistics reports.

2 Retrieved July 5, 2005, from http://www.cdc.gov/nchs/data/dvs/nvsr53_06t12.pdf

3 Employee Benefit Research Institute. (2004). Saving and retiring in America (2004 RCI fact sheet).

Washington, DC.

4 U.S. Social Security Administration. (2002). Income of the aged chartbook: 2002 (Publication 13-11727).

Washington, DC.

5 U.S. Social Security Administration. (2005). Annual report of the Board of Trustees of the Federal 

Old-Age and Survivors Insurance and Disability Insurance Trust Funds (p. 81). Washington, DC.

6 Bush, George W. (2005). The State of the Union Address.

7 Beller, D. Coverage status of workers under employer provided health and pension plans. Unpublished 

tabulations. Washington, DC: Employee Benefits Security Administration, Office of Policy and 

Research.

8 Ibid.

9 Purcell, P.J. (2005, September). Pension sponsorship and participation: Summary of recent trends (CRS 

Report to Congress RL30122). Washington DC: U.S. Library of Congress, Congressional Research 

Service.

10 Bureau of Labor Statistics. (2005, January). National compensation survey: Employee benefits in private 

industry in the United States, 2002-2003 (Bulletin 2573). Washington, DC.

11 Ibid.

12 Hewitt Associates. Hewitt study reveals biggest barrier to retirement saving may be lack of motivation,” [press 

release]. Retrieved February 22, 2005, from http://was4.hewitt.com/hewitt/resource/newsroom/

pressrel/2005/02-22-05.htm.
30

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Chapter Three: Retirement Saving

13 Sailer, P.J., & Nutter, S.E. (2000). Accumulation and distribution of individual retirement arrangements, 

2003. Retrieved July 5, 2005, from http://irs.gov/pub/irs-soi/00retire.pdf

14 Employee Benefit Research Institute, & Mathew Greenwald & Associates, Inc. (2005). 2005 retirement 

confidence survey. Washington, DC.

15 Ibid.

16 Government Accountability Office, Social Security Statements. (2005, April). Social Security 

Administration should better evaluate whether workers understand their statements (GAO-05-192). Retrieved 

July 5, 2005, from http://www.gao.gov/highlights/d05192high.pdf.

17 U.S. Department of Labor, Employee Benefits Security Administration. (2001). Advisory opinion 

(2001-09A). Retrieved May 26, 2005, from http://www.dol.gov/ebsa/regs/AOs/ao2001-09a.html.

18 Madrian, B., & Shea, D.F. (2001, November). The power of suggestion: Inertia in 401(k) 

participation rates and savings behavior. Quarterly Journal of Economics. 116(4). Cambridge, MA. 

MIT Press.

19 Vitt, L.A., et al. (2000). Personal finance and the rush to competence: Financial literacy education in the U.S.

(A national field study commissioned and supported by the Fannie Mae Foundation). Middleburg, 

VA: Institute for Socio-Financial Studies.

20 Ibid.

21 Madrian, B. & Shea, D.F.

22 Bernheim, B.D. (1996). Financial literacy, education, and retirement savings. University of Pennsylvania: 

Pension Research Council. 

23 Employee Benefit Research Institute, & Mathew Greenwald & Associates, Inc. (2003). 2003 Small 

Employer Retirement Survey. Washington, DC: Employee Benefit Research Institute.

24 Ibid.

25 Ibid.

26 U.S. Department of Labor, Employee Benefit Security Administration. Retrieved from www.dol.

gov/ebsa/pdf/simplenet.pdf & www.dol.gov/ebsa/pdf/simpleIRA.pdf. 

27 Employee Benefit Research Institute, & Mathew Greenwald & Associates, Inc.
31

Chapter 4

Credit

Overview

Across the nation, consumers are dealing 

with increased levels of debt. From 

January 2003 to January 2005, consumer 

debt levels increased nine percent, as 

revolving debt, most typically credit card 

debt, increased by eight percent, and non 

revolving debt increased by 10 percent.

1

This rise in consumer debt is consistent 

with the increased availability of credit 

from a variety of lenders. The increase 

in availability of credit has been fueled 

in part by technology, which has allowed 

increased efficiency in credit underwriting 

and pricing. Technology has significantly 

increased the ability of creditors to 

assimilate and process information to 

make credit risk evaluations and price 

according to the risk that each applicant 

represents. This technology also has 

played an important role in the growth in 

subprime lending, where creditors extend 

loans to riskier borrowers at higher rates.

Moreover, between September 2003 and 

September 2004, there were 1.6 million 

non-business bankruptcies filed.

2

 Providing 

assistance to those in bankruptcy and other 

financially troubled consumers has become 

a growth industry.

3

 In terms of the effects 

of counseling, those seeking reputable 

financial counseling fare better than those 

who have not obtained this information.

The use of reputable credit counseling 
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Chapter Four: Credit

has a significant impact on making 

borrowers more credit worthy, increasing 

the number of accounts that are paid off, 

and decreasing total individual debt.

5

Two important components of consumer 

credit are credit reports and credit scores.

Credit reports 

contain the 

historical 

performance 

of a consumer’s 

repayment 

history of 

financial 

obligations, 

including debt 

contracts, taxes, 

and utilities.

Lenders use 

this history 

of performance to assess the repayment 

risk that a consumer represents. A 

credit score is the numeric assignment 

of risk calculated from an algorithm 

that uses credit report information to 

predict the likelihood of repayment.

The findings of a recently released GAO 

report entitled, Credit Reporting Literacy: 

Consumers Understood the Basics but Could 

Benefit from Targeted Educational Efforts, 

show that a large percentage of American 

consumers have a good understanding of 

the basics of credit reporting: they appear 

to know how credit reports are used, what 

information is contained in a credit report, 

and are aware of their right to dispute 

inaccurate information.

6

 However, many 

consumers did not appear to understand 

that credit reports are used to price and 

underwrite insurance policies and can 

impact employment.

7

 Also, consumers are 

unaware that they can file a complaint with 

the FTC if they have found inaccuracies 

in their credit reports and are dissatisfied 

with the credit reporting agencies’ 

resolution of the complaint. According to 

the report, most consumers know what a 

credit score is, but do not know that some 

behaviors negatively affect their score.

By better understanding their credit 

reports, consumers can better manage 

their financial matters 

in a way that will 

help their credit 

scores. Additionally, 

consumers who review 

and understand 

their credit reports 

can more easily 

spot inaccuracies 

and instances of 

identity theft.

Challenges 

American consumers, regardless of 

their income level or credit histories, 

are regularly confronted with numerous 

credit offers from a wide variety of 

lenders. As consumer credit increases in 

the United States, Americans are faced 

with a variety of issues in making credit 

decisions. To begin it is important that 

consumers understand the impact that 

excessive credit can have on their longterm financial health. Moreover, an 

understanding of credit scoring and the 

effects a negative credit history can have on 

the cost of credit are critically important 

for consumers in evaluating credit offers.

8

 

In addition, when Americans choose to 

obtain credit, it is critically important for 

them to have an understanding of the 

terms of credit that are being offered to 

them so that they can select the credit 

terms best for them. These challenges 

are further compounded by not knowing 

where to seek out specific information 

and guidance on general credit issues.

9

 

Effective educational programs and 
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Chapter Four: Credit

materials provided by the Federal 

government, private sector, and nonprofit 

organizations can help overcome these 

challenges and equip consumers with 

knowledge about the costs and benefits 

of credit, and provide ready access to 

resources on evaluating credit offers 

and understanding consumer rights 

and protections. As consumers are met 

with aggressive marketing campaigns 

by creditors on a regular basis and gain 

increased access to credit, the need to 

strengthen consumer credit literacy 

becomes e.g., increasingly important.

Issues in Credit

1. Increasing Public Understanding 

of Credit, Credit Reports, and 

Credit Scores

One of the greatest financial challenges 

American consumers face is gaining 

access to information, education, and 

counseling when it is needed most. During 

critical teachable moments in consumers’ 

lives Americans are in need of guidance 

and information on personal credit.

Consumer credit education efforts should 

make consumers aware of their rights 

under the Fair Credit Reporting Act (FCRA) 

which allows them to review their credit 

reports for accuracy. If an error is found or 

if an item is incomplete, individuals should 

immediately contact the credit reporting 

agency that issued the report to have it 

corrected. The law mandates that the credit 

reporting agency and the organization 

that provided the information (such as a 

bank or credit card company) have the 

responsibility for correcting inaccurate 

or incomplete information on individual 

consumer credit reports. After a consumer 

inquiry, the credit reporting agency must 

provide written results to the individual, 

as well as another free, updated copy of 

the credit report to the individual if the 

dispute results in a change. If no change 

is made, the statement of the dispute 

will still be included in the official file.

The world of consumer credit transactions 

can be very complicated. In an effort 

to increase public understanding of 

credit, credit reports, and credit scores, 

public awareness efforts should focus on 

explaining the fundamental components 

of credit, such as key terminology (annual 

percentage rates, principal, interest 

and finance charges, points and fees, 

minimum payment, repayment schedules, 

installments, balloon payments, deferred 

interest, interest only, etc.), the calculation 

of finance charges, and the types of credit 

available (e.g., unsecured credit such 

as credit cards, overdraft lines of credit, 

consumer loans, and student loans versus 

secured credit such as mortgage loans, 

home equity loans, and home equity lines 

of credit). High-quality programs also will 

educate consumers about the providers 

of credit, including banks, credit unions, 

thrifts, merchants, and payday lenders.

Consumers throughout the nation have 

been able to learn about key terminology 

and parties involved in credit through a 

wide range of public education initiatives, 

including the FCRA and the New Free 

Credit Report Rule, and public resources, 

such as the new Federal publication, Your 

Access to Free Credit Reports. In addition to 

Federal sources of guidance, providers of 

credit, such as credit unions and banks, 

are making consumers aware of the role 

of credit and individual credit options.

These lender programs include seminars 

and public campaigns on key topics, 

such as issues that affect credit scores.

Fair Credit Reporting Act and the New Free 
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Credit Report Rule

The FCRA promotes the accuracy, fairness, 

and privacy of information in the files 

of credit reporting agencies. A 2003 

amendment to the FCRA, the FACT Act, 

requires each of the nationwide credit 

reporting agencies to provide consumers 

with a free copy of their credit report, 

upon request, once every 12 months, from 

www.annualcreditreport.com.

10 Consumers 

who order a copy of their report online 

by visiting this Web site should be able to 

access it immediately. Consumers may also 

complete and mail the form, the Annual 

Credit Report Request Form, which is 

available on the Web site. If the consumer 

orders the report by calling the toll-free 

1-877-322-8228 number, the report will be 

processed and mailed within 15 days.

A credit report 

contains 

information on 

where a person 

lives, how a 

person pays his 

or her bills, and 

whether the 

person has been 

sued, arrested, 

or has filed for 

bankruptcy.

Nationwide credit 

reporting agencies 

sell the information to creditors, insurers, 

employers, and other businesses that 

use it to evaluate applications for credit, 

insurance, employment, or renting.

Moreover, the FCRA provides additional 

consumer rights with respect to credit.

For example, under this law most 

consumers have the right to be told about 

information that is used against them, 

to ask for a credit score, and to dispute 

incomplete or inaccurate information.

The law also places responsibilities on the 

credit reporting agencies. For instance, 

credit reporting agencies must delete 

or correct inaccurate or unverifiable 

information; may not report outdated 

negative information; and must get 

consumer consent before providing any 

information to potential employers.

Federal Trade Commission Publication – 

Your Access to Free Credit Reports

The FTC has prepared a brochure entitled 

Your Access to Free Credit Reports, available at 

MyMoney.gov as well as at the FTC’s Credit 

Web site, www.ftc.gov/credit. The brochure 

describes how to order a free annual 

credit report; explains why consumers 

would benefit from ordering their credit 

report; delineates other instances where 

consumers are 

eligible to receive 

a free report; and 

explains what to 

do if the consumer 

finds inaccuracies or 

errors in the report.

As of September 1, 

2005, free reports are 

available in all states, 

U.S. territories and 

possessions, and the 

District of Columbia.

Credit Union Offers Public Seminar on 

Credit Scoring 

One regional credit union in Northeast 

Florida offered a free Credit Scoring

Seminar to the public in August 2004 

and another credit scoring seminar 

in the fall of 2005. Credit Scoring 

seminars are taught by credit union 

representatives and are intended to 

educate attendees on how to read credit 

reports, improve their individual credit 
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score, identify mistakes, and settle 

disputes. Credit union membership 

eligibility is extended to everyone in 

Northeast Florida and all members of 

the public are invited to attend the credit 

union’s free credit scoring seminars.

Large Bank Provides Classes and Materials on 

Credit Management

One center was created to support 

consumer demand for much needed 

financial and credit education through 

funds provided by a major bank. This 

center helps families achieve their 

financial goals by teaching them how to 

manage money and use credit wisely. A 

core component of the center’s public 

awareness campaign is designed to 

educate consumers on the importance of 

knowing one’s credit score. The center 

also conducts adult financial literacy 

workshops nationwide and maintains a 

credit and financial education Web site.

Summary

American consumers can become efficient 

managers of credit if they are equipped 

with a solid understanding of and 

comfort level with the credit system, its 

terminology, and the institutions involved 

in personal credit and credit reporting.

Individuals also should be aware of their 

rights under the FCRA, understand how 

to check the accuracy of their credit 

reports, and learn how to fix potential 

credit report errors or other such problems 

through the credit dispute process.

2. Using Reputable Credit 

Counseling Services

Even for those who understand the 

credit process, knowing what to do 

during a time of specific financial 

difficulty can be particularly trying. Many 

consumers do not know to seek out credit 

counseling when it is needed most.

For American consumers experiencing 

financial problems, reputable and effective 

credit counseling services not only provide 

assistance in negotiating with creditors 

on behalf of the consumer, but also 

help to educate the consumer on how 

to manage personal finances and avoid 

future credit problems. Reputable credit 

counseling services employ counselors 

whom they certify and train in consumer 

credit, money and debt management, 

and budgeting. Moreover, non-profit 

credit counseling organizations have a 

legal obligation to provide education 

and counseling to consumers.

11

Effective counseling services help 

consumers understand how to qualify 

for, shop for, obtain, and maintain credit.

By counseling individuals on issues, 

such as establishing credit, debt-toincome ratios, credit history and score, 

comparing terms, timely repayment, credit 

management, and debt consolidation, 

credit counselors, can empower credit 

holders. Credit counseling efforts also can 

provide specific strategies for resolutions 

and understanding consumer protection 

and consumer rights. As advocates, 

counselors can contact lenders to discuss 

options in time of financial stress and help 

identify agencies to contact for consumer 

credit issues and specific complaints.

But not all credit counseling organizations 

provide these services. Some charge high 

fees, not all of which are disclosed, or urge 

consumers to make voluntary contributions 

that can cause them to fall deeper in 

debt. Many of these organizations claim 

that a debt management plan is the only 

option for the consumer – before those 
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counselors spend time reviewing the 

consumer’s financial situation – and many 

offer little or no consumer education 

and counseling. Moreover, just because 

a credit counseling organization says 

that it is non-profit does not guarantee 

that its services are free or affordable, 

or that its services are legitimate.

12

Unfortunately, in recent years, there has 

been a growth in deceptive practices in 

the credit counseling marketplace. The 

FTC and some state Attorneys General 

recently took action against several 

companies that called themselves credit 

counseling organizations. The FTC and 

the state Attorneys General said that these 

companies deceived consumers about the 

cost, nature, and benefits of the services 

they offered; some companies even 

misrepresented their nonprofit status.

13

The IRS included credit counseling 

agencies in its 2005 “Dirty Dozen” 

report in order to remind taxpayers 

that they should be careful with those 

credit counseling agencies that push 

debt payment agreements, charge high 

fees, or claim to fix credit ratings.

14 

Additionally, in order to ensure that 

non-profit credit counseling agencies are 

complying with the law, the IRS has made 

auditing these organizations a priority.

Consumers can find assistance and 

guidance on personal credit issues by 

working with reputable credit counseling 

services. Additionally, other consumers 

utilize urban-based, non-profit financial 

counseling agencies offering programs 

that address the specialized needs of 

inner city residents with credit issues; 

and Federal judicial efforts that serve 

Americans who have sought relief from 

persistent, unresolved credit problems 

by filing for bankruptcy protection.

Reputable Credit Counseling Services

In communities throughout the nation, 

American consumers turn to credit 

counseling services to provide the 

information and guidance they need to 

navigate difficult credit issues. A reputable 

credit counseling organization will 

negotiate on a consumer’s behalf with 

creditors and, more importantly, will offer 

advice on managing money and debts.

15 

Additionally, a credit counselor will help a 

client develop a budget, and will provide 

free educational materials and workshops.

Reputable credit counseling organizations 

employ counselors whom they certify and 

train in the areas of consumer credit, 

debt management, and budgeting.

16 

They work with consumers to analyze 

their entire financial situation and 

develop a personalized plan to solve 

their money problems.

1 7 Typically, they 

offer follow-up sessions that are designed 

to monitor the consumer’s budget 

and keep the consumer on track.

Non-profit Organization Offers Credit 

Counseling in Community Centers

One nonprofit organization with a 

presence in several major U.S. cities 

includes credit counseling among the 

financial services it provides at its inner 

city community centers. Visitors to these 

community centers can avail themselves 

of financial counseling to help attain 

economic self-sufficiency and to help the 

communities in which they live gain a 

sustained spirit of revitalization. Through 

ongoing collaborations and long-term 

partnerships with leading government, 

private sector, and community interests, 

such urban-based, non-profit centers 

address the specialized needs of inner city 

residents with credit issues, providing self 

help, hands on programs that allow inner 

city residents to work toward financial 
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security and achieve independence.

In these community centers, trained 

counselors work with credit counseling 

program participants over a period of two 

weeks to six months. The program operates 

in the eight cities across the country 

where the organization has community 

centers. This program and others like it 

work to resolve issues that previously had 

restricted individuals from becoming 

depository customers at a bank. Counselors 

help mitigate 

prohibitive 

issues, such as 

those that may 

restrict individuals 

from accessing 

and opening 

traditional, low cost 

lines of credit and 

issues that impede 

homeownership.

Through the hands 

on implementation 

of results-oriented 

specialized empowerment programs-—

including economic empowerment, 

digital empowerment, and economic 

education-—these community centers 

attempt to meet the specialized needs of 

inner city residents who are struggling 

to address unresolved credit issues.

The program offers one-on-one credit 

counseling assistance to individuals, 

and identifies and works to eliminate 

the barriers that prevent those with 

credit problems from fulfilling their full 

economic potential. The goal of this credit 

counseling program with an emphasis on 

self-help is to provide consumers with a 

focused, assisted course of correction.

Credit Counseling and Financial Education 

for Bankruptcy Filers

Consumers facing serious financial 

problems that may lead to bankruptcy 

should know that a new bankruptcy law 

requires them to obtain credit counseling 

from a credit counseling agency approved 

by the U.S. Trustee Program (a component 

of the Department of Justice) within 180 

days before they file for bankruptcy.

The new law also requires a consumer 

bankruptcy filer to attend a personal 

financial instruction course, after filing 

bankruptcy, as a condition of receiving a 

discharge of debt. The 

U.S. Trustee Program 

will approve financial 

instruction courses 

for this purpose, 

and the Bankruptcy 

Clerk will maintain a 

publicly available list 

of approved courses.

These provisions, 

which took effect on 

October 17, 2005, were 

adopted as part of the 

Bankruptcy Abuse 

Prevention and Consumer Protection Act 

of 2005, signed into law on April 20, 2005.

Summary

As Americans deal with increased 

consumer debt, confusing financial 

offerings, and programs offering quick 

fixes to financial problems, reputable 

credit counseling services play a unique 

and important role in helping Americans 

to manage credit successfully. Outreach 

efforts should promote reputable credit 

counseling for consumers and help link 

those in need to available services.

Counseling should not be seen simply as 

an option of last resort. Consumers should 

seek out credit counseling before they 

encounter major problems during times 

of financial stress, and before a financial 
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Calls to Action

Tactics Employed: Public Awareness, Integration, and

Teachable Moments

4-1 The Treasury Department will launch a multi-media campaign in the third quarter 

of 2006 to seek to improve credit literacy among consumers. The campaign also will 

invite Americans to get information about managing consumer credit at MyMoney.

gov. By accessing the Web site, Americans can learn more about credit history, 

credit reporting, and credit scoring.

4-2 Consumers should take advantage of the credit management tools available to them 

such as the free annual credit reports, available at www.annualcreditreport.com 

and 1-877-322-8228. Consumers should review the information in their report, 

understand how it is used, and know how to detect errors and possible instances of 

identity theft.

4-3 Consumer lenders should use their unique expertise and existing distribution 

channels to promote credit education among their customers and the public 

at large. Useful efforts might include development and distribution of credit 

education materials, support for reputable credit counseling or financial education 

efforts, referrals to credit education resources, or creation and maintenance of 

other financial education programs.  Efforts may focus on adults or youth, but such 

financial education efforts should be easily distinguishable from marketing efforts 

from the consumer’s perspective.

4-4 Consumers should seek reputable credit counseling services early, when financial 

problems start, to avoid potential bankruptcy. Lenders and social service 

organizations should refer consumers to reputable credit counseling services at 

the onset of financial difficulties

failing or before declaring bankruptcy.

Effectively used, credit counseling can help 

consumers avoid future financial problems.

Endnotes

1 Federal Reserve (n.d.). G19 Consumer Credit. Retrieved August 2, 2005, from www.Federalreserve.

gov/releases/g19/hist/cc_hist_sa.html.

2 American Bankruptcy Institute (n.d.). Annual U.S. non-business bankruptcy filings by chapter 2000-2004. 

Retrieved August 2, 2005, from www.abiworld.org/Template.cfm?Section=Press_Releases2&CONTE
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NTID=12267&TEMPLATE=/ContentManagement/ContentDisplay.cf.

3 Elliehausen, G.E., Lundquist, C., & Staten, M.E. (2003, January). The impact of credit counseling 

on subsequent borrower credit usage and payment behavior. Washington, DC: Credit Research Center, 

Georgetown University.

4 Ibid.

5 Ibid.

6 The Government Accountability Office. (2005, March). Credit reporting literacy: Consumers understood 

the basics but could benefit from targeted educational efforts (Report GAO-05-223). Washington, DC

7 Ibid.

8 Many private companies and lending institutions develop scoring software systems to compute 

credit scores. Credit reporting agencies do not generate credit scores, but rather are repositories of 

consumer credit histories. 

9 The Government Accountability Office. (2005, March). Credit reporting literacy: Consumers understood 

the basics but could benefit from targeted educational efforts (Report GAO-05-223). Washington, DC: 

Author.

10 Free reports are now available in all states, U.S. territories and possessions, and the District of 

Columbia.

11 A credit counseling agency with 501(c)(3) status under the Internal Revenue Code is required to 

be organized to provide educational or charitable services, i.e., it is an agency’s 501(c)(3) status that 

requires it to provide educational services. 

12 Federal Trade Commission. (2005, March). Facts for consumers: For people on debt management plans: A 

must do list. Retrieved July 26, 2005, from www.ftc.gov/credit/.

13 Federal Trade Commission. (2003, November). Fiscal fitness: Choosing a credit counselor, and Knee deep 

in debt. Retrieved July 26, 2005, from www.ftc.gov/credit.

14 The “Dirty Dozen” report, published by the IRS, is an annual listing of notorious tax scams. The 

report also reminds taxpayers to be wary of schemes that promise to eliminate taxes or otherwise 

sound too good to be true. See www.irs.gov for more information.

15 See also Jean Chatzky (2005, August). How to find a credit counselor that you can trust. Retrieved August 

22, 2005 from www.msnbc.msn.com/id/9034211l.

16 Federal Trade Commission. (2005, March). Facts for consumers: Credit and your consumer rights, Federal 

Trade Commission, and Choosing a credit counselor. Retrieved May 26, 2005, from www.ftc.gov/credit.

17 Ibid.
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41

Chapter 5

Consumer Protection

Overview

Consumers’ actions move markets and 

can determine the difference between 

the success or failure of entire businesses 

or industries. Government consumer 

protection programs confront fraud, 

deception and privacy breaches that 

can shake consumer confidence and 

undermine consumer choice. 

When consumers are scammed, they 

lose more than money. They can also 

lose faith in the marketplace. The 

principle of caveat emptor (“let the 

buyer beware”) is important for all 

consumers to follow. A vibrant economy 

cannot afford to have consumers lose 

confidence in the marketplace.

According to the FTC, an estimated 11 

percent of American adults are scammed 

each year. The FTC’s survey of consumer 

fraud in the United States, released in 

August 2004, showed that consumers 

with high levels of debt are at increased 

risk of becoming victims of fraud.

1

 

Of the four most common frauds in 

the survey, three are related to credit, 

including credit-repair scams. These frauds 

often target people with high debt loads 

or poor credit. According to the Federal 

Bureau of Investigation (FBI), senior 

citizens also are often targets of fraud.

2

 

The FTC, state Attorneys General, and 

other Federal, state and local consumer 
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protection agencies pursue such frauds 

using aggressive law enforcement.

Of the threats that consumers face in the 

marketplace, one of the greatest is identity 

theft. The FTC has found that nearly 

10 million people a year are victims of 

identify theft, which involves either misuse 

of existing accounts or new accounts 

falsely established in the victim’s name.

That translates into nearly $48 billion in 

losses to businesses, nearly $5 billion in 

losses to individual victims, and nearly 300 

hours per victim spent trying to resolve 

the resulting problems. Although people 

who had new accounts opened in their 

names made up one-third of the victims, 

they suffered two-thirds of the harm.

3

Identity theft was the number one topic 

of consumer fraud complaints to the 

FTC in 2004, accounting for 39 percent 

of the consumer fraud complaints 

filed that year. In fact, the FTC receives 

15,000 to 20,000 contacts each week 

from victims and consumers who want 

to learn how to protect themselves 

from identity theft or mitigate risks.

4

 

Employers and commercial entities that 

have databases that contain personal 

identification information recently 

have become targets of identity thieves.

This represents another potential 

vulnerability for identity theft and another 

reason consumers need to become 

knowledgeable about identity theft and 

how to deal with its consequences.

Challenges 

One key to reducing fraud is the delivery 

of messages to consumers at times when 

they are open to learning and changing 

their behaviors, such as when they have 

encountered financial difficulty or 

have been a victim of credit fraud or 

identity theft. Education can empower 

consumers to recognize, avoid, and report 

fraudulent or deceptive practices and 

is essential to consumer protection.

Issues in Consumer Protection

1. Educating Consumers about Reducing 

their Risk of Identity Theft

One of a consumer’s most important 

financial assets is his or her credit 

history. Identity thieves seek to deprive 

a growing number of Americans of the 

good credit reputation they have tried to 

build. Identity theft is an insidious crime; 

many consumers may not even realize 

they have been victimized. For most, 

recognition of identity theft occurs when 

consumers receive a bill for a credit card 

account that they never opened, find 

debts on a credit report that they never 

incurred, notice a billing cycle where they 

have not received a statement, or find 

specific charges that they did not sign 

for, authorize or know anything about.

Government entities, such as the FTC, 

are working to ensure that Americans 

are better informed about identity theft.

Through public-private partnerships, 

consumers continue to learn more 

about the tell-tale signs of identity theft, 

preventive steps, individual legal rights, and 

how to exercise these rights if an incident 

has occurred. National public awareness 

campaigns also are instrumental in helping 

Americans to continue to receive important 

messages about consumer protection.

Public education initiatives such as those 

established by the FTC, the Treasury 

Department, the U.S. Postal Inspection 

Service, and the public-private steering 

committee that produces the National 

Consumer Protection Week are particularly 

useful in highlighting identity theft issues.
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Federal Trade Commission

The FTC has taken the lead among 

Federal agencies in the development and 

dissemination of consumer information 

about identity theft, both in English and in 

Spanish. To increase consumer awareness 

and to help them minimize the risk of 

identity theft, the FTC published a booklet, 

ID Theft: What It’s All About? Another 

FTC booklet, Take Charge: Fighting Back 

Against Identity Theft, is a comprehensive 

victim recovery guide that describes what 

steps to take, legal rights, how to handle 

specific problems one may encounter on 

the way to clearing one’s name, and what 

to watch for in the future. This guide 

also includes the ID Theft Affidavit, a 

form developed by consumer victims, law 

enforcers, and credit grantors for victims 

to use when disputing unauthorized 

accounts with creditors. Many of the FTC’s 

identity theft and credit publications 

include information about consumers’ 

credit rights under the FACT Act.

The FTC also manages the Identity 

Theft Data Clearinghouse, the Federal 

government’s central source of information 

on identity theft and its database for identity 

theft complaints. The FTC supports a 

toll-free hotline (1-877-IDTHEFT), and a 

secure complaint form at www.consumer.

gov/idtheft.

The FTC’s consumer and business 

education campaign on identity theft has 

included other materials, media mailings, 

radio public service announcements, and 

guest interviews on local and national radio 

and television programs. The FTC’s tips 

for consumers on reducing their risk of 

identity theft or dealing with its aftermath 

have been repeated in thousands of radio 

and television broadcasts, newspaper 

and magazine articles, and Web sites.

Indeed, numerous law enforcement 

agencies, consumer protection 

organizations, and financial institutions 

have printed, distributed or repackaged the 

FTC’s consumer information on identity 

theft. A national association of retirees 

helped enhance the FTC identity theft 

campaign by co-branding ID Theft: What It’s 

All About. The association printed 500,000 

copies of the brochure in English and 

30,000 copies in Spanish, and distributed 

the material through its state offices at 

events, forums, fairs, and “consumer 

universities.” A major supermarket 

chain, the SSA, the FDIC, the U.S. Secret 

Service, and two national credit card 

companies are among other entities that 

have customized the FTC’s information 

and distributed its materials to audiences 

under those organizations’ brands.

U.S. Department of the Treasury

The Treasury Department released a 

public report entitled The Use of Technology 

to Combat Identity Theft which focuses on 

available biometric technologies used 

to verify customers when they engage 

in financial transactions. This report 

also examines various non-biometric 

technologies financial institutions currently 

use to deter and detect the crime of 

identity theft. The Treasury Department 

anticipates continued improvements in 

non-biometric technologies along with 

the increasing use of biometric security 

and identity products on a case-by-case 

basis, but finds that biometrics are “not a 

silver bullet” for reducing identity theft.

In 2004, the Treasury Department, 

working with other parts of the Federal 

government and with the financial services 

sector, released a report entitled Lessons 

Learned by Consumers, Financial Sector Firms, 
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and Government Agencies During the Recent 

Rise of Phishing Attacks. This publication, 

available at www.treas.gov/offices/

domestic-finance/financial-institution/

cip/pdf/fbiic-fsscc-report-05-2005.pdf, 

describes measures consumers can take 

to prevent falling victim to phishing 

and how to respond if they receive a 

phishing email or become a victim.

U.S. Postal Inspection Service

The U.S. Postal Inspection Service 

works with Federal, state, and local law 

enforcement partners and with other 

government and industry stakeholders to 

help prevent, investigate and prosecute 

identity crimes. U.S. Postal Inspectors are 

charged with investigating identity and 

financial crimes that involve the U.S.

mail.  The Postal Inspection Service 

has produced and disseminated a DVD 

entitled Identity Crisis, which presents a 

dramatic look at a couple victimized by 

identity theft, the criminals who defrauded 

them, and the devastating aftermath. The 

also provides tips on how individuals can 

protect themselves proactively against 

identity crimes and the steps they can 

take in the event they become victims.

U.S. Department of the Treasury DVD

The Treasury Department developed a 

DVD to educate consumers about how 

to deter and detect identity theft and 

what measures to take if they become 

victims. Identity Theft: Outsmarting the Crooks

examines the costly crime of identity 

theft for which consumers spent more 

than 250 million hours last year repairing 

the damage to their credit records. In 

addition to what it costs consumers, 

commercial and financial firms lose 

billions annually. A real life victim’s story 

highlights how important it is that victims 

of identity theft act quickly to resolve their 

situations. Panel discussions emphasize 

the value of industry, government, and 

consumer collaboration to combat this 

crime online and in the physical world.

In the DVD, financial sector representatives 

and government officials discuss what 

identity theft is, how identity thieves go 

about stealing identities, and specific steps 

we as individuals can take to safeguard our 

sensitive information. Viewers will learn 

that common sense actions like destroying 

documents with sensitive information 

before throwing them out or checking 

their credit reports at least once a year 

can help stop the thieves. Viewers will 

also find that filing a police report can 

help to expedite a victim’s recovery from 

identity theft. A resource library contains 

additional information, brochures, forms, 

and Web sites to help consumers.

In the first quarter of 2006, the 

Treasury Department will make the 

DVD available to the public through 

the MyMoney.gov Web site and the 

1-888-MyMoney toll-free hotline.

National Consumer Protection Week 

National Consumer Protection Week (NCPW) 

is designed to highlight consumer 

protection and education efforts around 

the country. Every February a steering 

committee of government agencies 

and public and private sector groups 

partner to select and profile a timely 

topic of consumer interest. For example, 

for the 2005 campaign, organizations 

partnered to help educate consumers 

and businesses about identity theft. A 

theme of the 2004 NCPW dealt with the 

benefits of financial literacy. Each year, 

the NCPW steering committee Web site 

offers a “turnkey” press kit, with resources 

including sample news releases, letters 
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to the editor, op-eds, radio public service 

announcements, posters, educational 

materials, and promotional ideas.

NCPW is organized by a coalition of 

organizations, including the FTC, the 

Federal Citizen Information Center, the 

Federal Communications Commission, 

the FDIC, the U.S. Department of Justice’s 

Office for Victims of Crime, the U.S.

Postal Service, the U.S. Postal Inspection 

Service, a national association targeted 

to consumer agency 

leaders, a national 

organization for 

consumers, a national 

association for retirees, 

a national organization 

representing local 

businesses, a major 

consumer rights and 

protection agency, a 

national consumer 

federation, the 

National Association 

of Attorneys 

General, a national 

association targeted 

to consumer affairs 

leaders, the California Office of 

Privacy Protection, the Ohio Attorney 

General’s Office, a non-profit resource 

center with a focus on identity theft, 

and a non-profit clearinghouse that 

addresses privacy rights issues.

Summary 

Education is a consumer’s first line 

of defense against a variety of unfair, 

deceptive and misleading practices in 

the marketplace. Consumers can learn 

how to avoid, identify, and report a 

variety of threats by accessing educational 

materials through the media, state and 

local government agencies, advocacy 

and community-based organizations, 

schools, and other trusted sources.

2. Guarding against Fraudulent 

Business Opportunities 

Some Americans can be taken in by 

fictitious business opportunities and 

other money-making schemes, where 

fraudsters try to gain consumers’ financial 

information and access to their financial 

resources. These schemes pose real 

dangers to Americans 

seeking to invest in a 

business opportunity.

The FTC uses aggressive 

law enforcement to put 

fraudsters out of business 

and creative education 

tools to raise public 

awareness of fraudulent 

business opportunities.

Fraudulent business 

opportunities can 

have potentially 

long term effects on 

consumers. The FTC 

is expanding its efforts 

to alert consumers to recognize, avoid 

and report frauds of all kinds, including 

advance fee loan scams, credit card loss 

protection plans, and credit repair scams. 

The FTC’s Project Biz Opp Flop illustrates 

the agency’s approach to raising awareness 

of one major consumer protection issue.

Project Biz Opp Flop

Business opportunity scams appeal to 

the optimist in everyone, with their 

exhortations to “Be your own boss!” 

They are of particular concern to the 

FTC because they often prey upon 

consumers who are trying to build a solid 
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economic future and therefore, those 

least able to afford being ripped-off. The 

FTC attacks these scams on two fronts: 

through coordinated law enforcement 

actions and consumer education.

For example, the FTC recently 

launched Operation Biz Opp Flop, a 

collaborative civil and criminal law 

enforcement effort to crack down on 

business opportunity fraud, including 

franchise and work-at-home scams. The 

effort included six FTC cases aimed at 

schemes that defrauded consumers out 

of approximately $100 million dollars, 

and more than 100 additional civil and 

criminal actions brought by the U.S.

Department of Justice, the U.S. Postal 

Inspection Service, and 14 states.

To reach consumers who use the Internet to 

find business opportunities, the effort also 

included launching a “teaser” Web site that 

provides valuable information on how to 

avoid falling victim to a business opportunity 

scheme. The site for Sundae Station

(www.wemarket4u.net/sundaestation) 

looks like a pitch for a “can’t miss” business 

opportunity for an ice cream sundae 

vending machine. The site contains 

typical claims of fast money with minimal 

effort. Once consumers click on any of 

the links, they learn the ad is actually a 

consumer education piece posted by the 

FTC with guidance about recognizing and 

avoiding business opportunity rip-offs.

The Sundae Station teaser site is part of 

a larger consumer education campaign 

that includes media outreach along with 

brochures, electronic cards, public service 

messages for the classified ad columns of 

newspapers, and short newspaper feature.

The cooperation between the FTC and 

law enforcement authorities—and the 

resulting press coverage—sends a clear 

message to business opportunity scammers: 

law enforcement authorities are watching, 

and if you choose to engage in fraud, they 

will find you and shut you down. As a result 

of aggressive public campaigns, such scam 

artists also are beginning to recognize that 

jail time may await them for their misdeeds. 

Summary 

Public education efforts should 

accompany every consumer protection 

law enforcement announcement. Such 

outreach activities play an important role 

in educating consumers about frauds 

in the marketplace, as well as how to 

recognize and avoid fraud, and what 

to do if they have been victimized.

3. Safeguarding Senior Citizens from 

Targeted Consumer Threats

Many criminals choose to prey on 

older Americans. Through education 

efforts and engagement campaigns 

launched by organizations such as the 

Attorney General’s Offices of Florida and 

Kentucky, more seniors are better able 

to defend themselves against consumer 

fraud, including identity theft.

Attorney General’s Office of Florida

Recognizing the specific fraud threats to 

senior citizens and seeking to educate 

residents on how to avoid such risks, 

the Attorney General’s Office of Florida 

established the Seniors vs. Crime Project.

Run by volunteers, this seniors-focused 

program reinforces the message of crime 

prevention and provides specific means for 

Florida’s senior population to be alerted to 

consumer fraud and other such criminal 

acts. To date, Seniors vs. Crime has trained 

more than 2,000 volunteers throughout the 

state to assist in this public education effort.

Seniors vs. Crime was started to offer crime 
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prevention seminars to Florida’s older 

residents while providing comprehensive 

training for law enforcement officers 

and other criminal justice practitioners 

in understanding how their work is 

impacted by Florida’s aging population.

Since its launch, the program has 

established storefronts where seniors 

can visit to report potential frauds 

or seek additional information.

Attorney General’s Office of Kentucky

The Attorney General’s Office of 

Kentucky works in collaboration with 

local law enforcement officials to operate 

a consumer protection prevention 

program entitled Senior Crime College. The 

Senior Crime College is designed to teach 

seniors how to recognize potential crimes 

before they happen by making them 

aware of the techniques perpetrators 

commonly use, and who to alert if they 

identify a scam or are victimized. The 

program, started in 1998, has educated 

thousands of Kentucky’s senior citizens 

on various consumer protection topics 

such as telemarketing fraud, home 

improvement and repair fraud, identity 

theft, and sweepstakes fraud. On average, 

there are about four programs a month 

where representatives from the Attorney 

General’s office and local law enforcement 

officials travel to senior centers and 

community facilities. To complement 

the Senior Crime College, the Attorney 

General’s office also disseminates a crime 

prevention handbook for seniors.

Summary 

Recognizing that senior citizens are 

frequently targeted by perpetrators of 

fraud, general consumer protection efforts 

by private and public sector organizations 

need to pay attention to the specific 

needs of seniors. Programs, materials, and 

outreach efforts should address seniors 

explicitly and make reporting accessible 

to those who have been victimized.
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Calls to Action

Tactics Employed: Public Awareness, Partnerships, and 

Quality Materials

5-1 Americans should learn more about preventing and recovering from identity theft 

through the use of Federal government materials. The media, private companies 

and non-profits can help with the Federal government’s efforts to raise awareness 

by directing consumers to MyMoney.gov and www.consumer.gov.

5-2 In the first quarter of 2006, the Treasury Department will make the DVD, 

entitled Identity Theft: Outsmarting the Crooks, available to the public through the 

MyMoney.gov Web site and the 1-888-MyMoney toll-free hotline.

Endnotes

1 Federal Trade Commission (August 2004) Consumer fraud in the United States: An FTC survey.[Federal 

Trade Commission Staff Report]. Retrieved from www.ftc.gov/reports/consumerfraud/

040805confraudrpt.pdf.

2 Federal Bureau of Investigation (n.d.). Retrieved from: www.fbi.gov/majcases/fraud/seniorsfam.

htm.

3 Ibid.

4 Ibid.
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Chapter 6

Taxpayer Rights

Overview

For virtually all Americans, understanding 

our rights and responsibilities as taxpayers 

is an essential component of financial 

literacy. As the American economy 

has evolved, tax code provisions have 

proliferated in number and complexity.

Navigating the complicated maze of code 

has become increasingly challenging for 

many. The task of simplifying the code is an 

important issue, attracting attention from 

the highest levels of government. President 

George W. Bush made it part of his reform 

agenda, outlining his plan within the 

2005 State of the Union Address: “Year 

after year, Americans are burdened by 

an archaic, incoherent Federal tax code.

I’ve appointed a bipartisan panel to 

examine the tax code from top to bottom.

And when their recommendations are 

delivered, you [United States Congress] 

and I will work together to give this 

nation a tax code that is pro-growth, 

easy to understand, and fair to all.”

In January 2005, the President appointed 

a bipartisan Advisory Panel on Federal 

Tax Reform, under the leadership of 

Senators Connie Mack and John Breaux, 

to make recommendations to make 

the tax code fairer for all Americans, 

simpler so everyone can understand 

it, and more pro-growth, to help boost 

our economy. The panel was also asked 

to draft recommendations that were 
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revenue neutral and that considered 

the importance of homeownership and 

charitable giving. The Panel held meetings 

all over the country; the members listened 

to experts, economists, lawyers, and average 

taxpayers; they studied all the information 

that was presented to them, and they 

have made bold recommendations. The 

recommendations were presented to 

U.S. Treasury Secretary John W. Snow 

on November 1, 2005, which began the 

dialogue that will help 

shape the future of tax 

policy. Their advice 

is the starting point, 

and the Treasury 

Department is reviewing 

their recommendations 

and considering them 

carefully before making 

recommendations 

to the President.

Given the complexity of 

Federal tax laws, many 

Americans currently 

rely on third-party assistance (paid and 

voluntary) to file their tax returns. In fact, 

more than 60 percent of all Americans 

use tax preparation services and spend 

more than $140 billion annually on these 

services. Many taxpayers focus strictly on 

meeting their obligations — that is, paying 

the amount owed to the government.

However, taxpayers have rights as well 

as obligations, and financially educated 

taxpayers are aware of both. The Federal 

tax code states that some people, such as 

persons with disabilities, senior citizens, 

those with low- to middle-income, the 

unemployed, and other groups, may 

be eligible for various benefits available 

through Federal programs and through tax 

incentives. Such support is often critical, in 

some cases bringing low-income taxpayers 

one step closer to financial stability.

Challenges 

Many taxpayers do not receive the tax 

benefit for which they are eligible. To 

understand why this is the case, two 

primary factors must be considered.

First, taxpayers — both individuals and 

businesses — do not automatically receive 

benefits; they must take direct action to 

initiate or claim the benefit. This, however, 

raises the second point — taxpayers must 

first be aware of those 

benefits for which they 

are eligible. Public 

awareness campaigns and 

educational initiatives 

must squarely address 

the issue of making 

taxpayers cognizant of 

the benefits for which 

they qualify under the 

Federal tax code.

Taxpayer rights are 

compromised when 

taxpayers are unaware 

of the full range and scope of available 

programs and initiatives. Increased 

public awareness offers the potential to 

maximize taxpayers’ access to resources 

that simplify the tax payment process and 

increase utilization of programs and rights 

for which taxpayers may be eligible.

Issues in Taxpayer Rights

1. Helping Individuals to Identify and 

Utilize Available Programs and Services 

Individuals qualify for tax benefits for a 

host of reasons. Persons with disabilities 

and/or their caretakers, senior citizens, 

low- to middle-income or unemployed 

individuals, and others all may be eligible 

to receive valuable benefits. Tax benefits 

are organized on both national and 
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community-based levels and may take 

the form of tax credits, tax preparation 

assistance or even direct advocacy.

Tax Credits

When taxpayers fail to exercise their rights, 

billions of dollars in unclaimed benefits 

are forfeited. Those who do exercise their 

rights realize a significant return: that is, 

21 million low-income, working American 

taxpayers do receive approximately $38 

billion by claiming the Earned Income 

Tax Credit (EITC), a measure designed to 

aid low-income Americans.

1

 Yet millions 

of taxpayers eligible for the credit do not 

claim it, effectively forfeiting billions of 

dollars each year. The EITC is just one 

of many such credits available to benefit 

low-income, working Americans.

Other taxpayers are aware that they 

qualify for some benefits but disregard 

their eligibility for other benefits.

For example, taxpayers who receive 

Supplemental Security Income (SSI) 

often neglect other benefits that they 

are entitled to through the Federal tax 

code. Further, a 2004 poll found that 

83 percent of persons with disabilities 

never claimed available tax credits and/

or deductions related to work, and less 

than half of persons with disabilities 

who own homes claimed available 

home mortgage interest deductions.

2

National Volunteer Tax Preparation Programs

Those who are entitled to EITC, SSI, 

and other Federal benefits can maximize 

their opportunities by turning to 

volunteer tax preparers, often available 

through a range of Federal, nonprofit and faith-based organizations.

For instance, low-income workers can 

seek assistance from the IRS’s Voluntary 

Income Tax Assistance (VITA) program.

VITA provides aid to those who need help 

preparing their income tax returns by 

linking taxpayers to volunteers trained to 

prepare basic Federal income tax returns.

VITA offers free tax help to people whose 

incomes are $36,000 or less. Volunteers 

sponsored by various organizations receive 

training to prepare basic tax returns in 

communities across the country. VITA 

sites are generally located at community 

and neighborhood centers, libraries, 

schools, shopping malls and other 

convenient locations. In some locations, 

participants also are able to receive free 

electronic filing of completed tax returns.

The VITA Web site is www.irs.gov/

newsroom/article/0,,id=108104,00.html.

The IRS also sponsors programs to 

provide taxpayer assistance for key target 

populations, including, for example, 

senior citizens and military personnel.

The Tax Counseling for the Elderly (TCE) 

program provides free tax assistance 

to people 60 or older, while Tax-Aide 

volunteer-counselors offer tax advice 

to low-to-middle income taxpayers, 

particularly those 60 or older during the 

filing season. The Armed Forces Tax 

Council offers tax program coordinators 

for members of the Army, Air Force, Navy, 

Marine Corps and Coast Guard. Through 

military VITA sites, service personnel can 

receive free tax advice, tax preparation, 

and assistance to military members and 

their families worldwide. Moreover, people 

with disabilities can receive tax benefit 

information and assistance through a 

collaborative national tax campaign 

and local social services agencies.
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Local Social Services Organization Offers Free 

Tax Filing to Low-Income Taxpayers in Florida 

Often, free tax preparation assistance 

exists at the local level. Such services 

deliver assistance to those who need 

support to successfully navigate 

current tax code provisions.

For example, taxpayers in one city in 

Florida who seek assistance in securing 

the tax benefits to which they are entitled 

have access to a program that enables them 

to turn to local organizations for help.

The effort seeks to empower individuals 

and communities by promoting civic 

engagement, economic fairness and 

improved access to health and human 

services. A key purpose of the campaign is 

to heighten awareness of and increase the 

number of low-income workers in the area 

who claim the refundable Federal EITC.

First launched in 2002, in its first year, 

the program generated an additional $62 

million in revenue for area residents by 

significantly boosting EITC filings. With 

the “multiplier” effect of local spending, 

the program’s inaugural year is estimated 

to have had an impact of a quarter of a 

billion dollars on the local economy.

3

 In 

one Florida city, the program assisted 9,258 

residents in the 2004 tax season, achieving 

over $800,000 in saved tax preparation 

fees.

4

 Further, the campaign helps 

consumers file tax returns electronically 

and encourages unbanked taxpayers to 

open bank or credit union accounts to 

allow direct deposit of tax refunds.

To achieve this, the program works with 

6,000 community volunteers trained by 

the IRS who are drawn from a broad 

spectrum of community groups, faithbased organizations, policy makers, 

businesses, and individuals. Free tax 

preparation services are offered to 

consumers in need, a service that helps to 

increase the overall volume of community 

EITC filings. An additional goal of the 

initiative is to promote general financial 

education and to enhance workers’ 

abilities to build assets by making them 

aware of reputable financial institutions 

and asset development programs.

Taxpayer Advocate Service

Individual and business taxpayers have 

access to useful resources — even 

confidential, free counsel — to resolve 

tax-related problems. The Taxpayer 

Advocate Service (TAS) is available to 

provide assistance in this area.

Although the TAS is a part of the IRS, 

it avoids conflict of interest through its 

statutory independence, and its case 

advocates work on behalf of taxpayers to 

ensure that problems are resolved properly.

TAS has the authority to direct the IRS 

to hold off on taking certain imminent 

collection actions until the taxpayer has an 

opportunity to speak with IRS personnel 

about alternatives. To request the services 

of a TAS case advocate, taxpayers must 

contact TAS at their toll-free number.

In addition, all taxpayers have the right to 

secure representation to resolve Federal 

tax disputes. Depending on income 

level, Low-Income Taxpayer Clinics 

(LITCs) represent low-income taxpayers 

before the IRS in Federal tax disputes 

at no cost or for a nominal charge.

TAS also administers a grant program for 

LITCs. Though the clinics receive partial 

funding from the IRS, both the clinics 

and clinic volunteers are completely 

independent of and are not affiliated 

with the Federal government, and instead 

are operated by nonprofit organizations 

or academic institutions. LITCs also 

provide tax education and/or outreach 
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for taxpayers who speak English as a 

second language. A list of LITC locations 

can be found on the IRS Web site.

Summary

A number of taxpayer benefits are available 

to Americans. By taking advantage of the 

credits and services described, taxpayers 

can better understand their rights 

and can optimize their personal and 

business tax filings. Increased education 

allows taxpayers to avail themselves 

fully of the benefits to which they are 

entitled under the Federal tax code.

2. Education and Outreach to Individuals 

and Employers

Education and outreach are essential to 

help make taxpayers aware of the benefits 

available to them as part of the Federal 

tax code. While some of the programs 

were addressed previously, this section 

of the National Strategy centers on the 

education and outreach aspects of these 

programs. Education and outreach is 

often appropriately tailored to respond 

to the needs of key constituencies, such 

as individuals with disabilities and those 

who employ or support them. Other 

programs identified, for example, support 

the specialized needs of taxpayers who 

reside in rural areas; while still others 

profile the targeted efforts of local social 

service agencies. Also featured are Federal 

efforts to increase awareness of and 

access to tax incentives for business.

National Campaign for Individuals with 

Disabilities and their Caretakers and Employers 

Thirty-eight percent of working-age adults 

with disabilities live in households with 

annual incomes of under $15,000, and 30 

percent of disabled working adults hold 

neither checking nor saving accounts.

5

 

Such statistics demonstrate the need 

to better educate those with disabilities 

about their eligibility for particular 

benefits to improve their financial 

standing. Community organizations play 

a critical role in responding to the need 

for increased awareness. For example, 

a coalition of non-profit organizations, 

Federal government agencies, lenders, 

and educational institutions recently 

launched a three-year, multi-faceted 

national campaign to inform individuals 

with disabilities, their families, and 

their employers about favorable tax 

provisions, financial education and 

other asset-building strategies.

The partnership campaign empowers 

disabled individuals and advances selfdirected economic security by developing 

new publications and products on access, 

accommodation, benefits training, tax 

provisions, and technical assistance.

One principal partner, a non-profit 

organization, also established a Web site 

to serve as a central location for financial 

information and identify credible resources 

for individuals with disabilities. In addition, 

the IRS has links to publications for 

individuals with disabilities at www.irs.gov.

Cooperative Extension Conducts Rural Outreach 

Project for Georgia Tax Filers

The Taxpayer Education and Outreach in 

Rural America Project, delivered in 12 

states by the Cooperative Extension, a 

nationwide, non-formal educational system, 

provides an annual opportunity for asset 

building among working poor families by 

assisting with the correct determination 

of tax liabilities and credits. The program 

promotes taxpayer education, offers 

information about refundable tax credits, 

and makes free tax assistance available 

to those who reside in rural areas of the 
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states. In addition, the program links 

filers to Cooperative Extension System 

financial literacy programs offered in 

partnership with the USDA-CSREES.

For the 2003 tax season, Georgia 

Cooperative Extension partnered with the 

IRS, which provided laptop computers, 

software, training, 

certification, and 

technical support. 

Staff provided one 

day of free tax filing 

assistance each 

week throughout 

the filing season at 

five locations plus 

numerous “oneday” sites arranged 

in partnership with 

local employers and 

other partners. As a result, in total, more 

than 400 tax returns were filed.  In 2004, 

program assistants provided one day of 

free tax preparation per week in each of 

18 counties throughout the filing season, 

along with numerous one-day remote sites 

at convenient locations to prepare 1,000 

Federal and state tax returns.  These filers 

received a total refund of $1.4 million, 

which they in turn spent or saved in one 

of 18 mostly poor, rural counties.  More 

than half (57 percent) paid between $19 

and $425 for tax preparation in 2003, with 

an average of $104 spent; this resulted 

in a combined saving of $49,572 in 2004 

for some 575 filers.  Use of direct deposit 

by filers doubled, from only 24 percent 

saying they used direct deposit last year to 

nearly half (49 percent) using it this year.

Social Services Agency in Kansas Helps Disabled 

Claim Tax Benefits 

Social services agencies are poised to exert 

significant influence in their communities.

For instance, one social services agency is 

collaborating with organizations and offices 

throughout Kansas to increase knowledge 

about and access to available financial 

services products among people with 

disabilities. The agency designed specific 

efforts targeted toward making individuals 

on SSI and Social Security Disability 

Insurance (SSDI) aware 

of the tax benefits 

under the Earned 

Income Tax Credit that 

they were potentially 

eligible for, but had not 

necessarily sought.

In 2003, the agency 

prepared returns for 97 

individuals who had no 

filing requirement or 

withholdings, with 54 

percent receiving tax 

refunds for the first time. The refunds 

represented $36,161 in new money for 

local residents. Some refunds were invested 

in personal savings while other funds 

were reinvested in the local economy.

Department of Labor Helps Businesses Employ 

Disabled Workers

Businesses, too, should understand 

benefits granted to them by the Federal 

tax code, for instance, those given for 

hiring and accommodating people with 

disabilities. DOL’s Office of Disability 

Employment Policy (ODEP) has developed 

a Tax Incentives for Business Fact Sheet. This 

document outlines the following three 

tax incentives which help employers 

offset costs incurred in accommodating 

employees with disabilities: the Small 

Business Tax Credit, the Architectural/

Transportation Tax Deduction, and the 

Work Opportunity Tax Credit (WOTC).

6

Under the Small Business Tax Credit, 

businesses may take an annual deduction 
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for expenses incurred to remove physical, 

structural and transportation barriers in 

the workplace to accommodate persons 

with disabilities.

7

 WOTC provides a tax 

credit of up to $2,400 per new employee 

for employers who hire workers from 

one of eight targeted groups, including 

qualified veterans, qualified SSI recipients, 

high risk youth, vocational rehabilitation 

(VR8) referrals, and qualified 

food stamp recipients.

9

Summary

Campaigns, programs and 

other outreach initiatives 

supported by partnerships 

among the Federal 

government, community 

based-organizations, nonprofit organizations, and 

academic institutions can 

increase public awareness 

of helpful tax provisions. All 

Americans — individual taxpayers, and 

especially persons with disabilities and 

their caregivers and employers — benefit 

from increased awareness of taxpayer 

rights, responsibilities and assistance.

Outreach efforts help individual and 

business taxpayers realize their financial 

potential under the tax law, even providing 

assistance in tax dispute resolution.

3. Reducing Taxpayer Risks and Costs by 

Encouraging Direct Deposit 

Taxpayers who receive Federal benefits, 

such as Social Security, may be at particular 

risk for fraud. Because many low- and 

moderate-income Americans receive 

Federal benefits through the mail, thieves 

are focused on intercepting checks and 

sensitive information from recipients 

and improperly using that information.

Taxpayers can protect their Federal 

benefits from thieves and external 

threats by taking advantage of innovative 

programs such as direct deposit of checks.

Application of successful initiatives such 

as the Go Direct campaign (detailed 

below) can help to equip consumers with 

the tools they need to take advantage 

of direct deposit opportunities.

Go Direct Campaign Increases the Safety and 

Convenience of Receiving Federal Benefits 

Sponsored by the Treasury Department 

and a Federal Reserve Bank, Go Direct is an 

initiative aimed at educating Americans on 

the many benefits of having their payments 

deposited electronically. The campaign 

seeks to motivate people to receive their 

Federal benefits in the safest, fastest and 

easiest way possible — direct deposit.

Go Direct’s public education campaign is 

designed to motivate more Americans to 

deposit their Federal benefit payments, 

such as Social Security and SSI, directly into 

their accounts with financial institutions.

The goal of the program is to help people 

get their Federal benefits in a way that is 

simple, safe and secure. Direct deposit is 

less burdensome for recipients because 

payments are deposited straight into the 

recipient’s personal account, eliminating 
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the need to hand-carry checks to a 

bank, credit union, or other depository 

institution. Since payment is sent and 

received electronically, the process is faster 

than traditional payment methods, giving 

participants greater financial flexibility.

The opportunity for criminals to steal 

checks in the mail is completely removed, 

eliminating the risk of mail fraud and 

reducing the risk of identity theft.

Direct deposit generates 

significant cost saving to 

the financial system in 

general, approximately 

75 cents per payment of 

paper checks, multiplied 

by millions of benefit 

payments per month.

With the Treasury 

Department issuing 

nearly 160 million benefit 

checks each year, direct 

deposit has the potential 

to save taxpayers about 

$120 million annually.

Despite direct deposit’s 

attractive benefits, 

currently millions of 

Americans — many senior citizens and 

disabled populations — still do not take 

advantage of the opportunity, choosing 

instead to receive their Social Security and 

other Federal benefits in the mail. Efforts 

to increase direct deposit will benefit 

today’s seniors and future generations 

in numerous ways, and, as such, the 

Treasury Department remains committed 

to encouraging more people to take 

advantage of the many benefits of direct 

deposit through the Go Direct campaign.

Summary

American taxpayers can take full advantage 

of the Federal benefits available to 

them, without fear of fraud or theft, 

by utilizing important financial tools 

such as direct deposit. In addition to 

the security benefits of direct deposit, 

the system also is highly cost effective.

4. Taking Advantage of Important, New 

Benefits to Realize Financial Saving

As the population continues to age, 

prescription drug coverage is of paramount 

importance to current 

and future retirees. Under 

a new Federal program, 

beginning January 1, 2006, 

prescription drug coverage 

is available to eligible 

Medicare beneficiaries.

HHS’ Prescription Drug 

Coverage public awareness 

campaign is an extensive 

outreach program that 

will educate consumers 

about the benefits they 

can receive from the new 

Medicare prescription drug 

plan (Medicare Part D).

Medicare Prescription Drug Coverage Public 

Awareness Campaign

HHS has embarked on an ambitious 

public awareness and education campaign 

to help eligible Americans understand 

and enroll in a Medicare prescription 

drug plan. Through this effort, HHS will 

distribute handbooks to all Medicare 

recipients, make information available on 

the plan through its Web site and tollfree telephone numbers, and offer free 

personalized counseling through the State 

Health Insurance Assistance Program and 

other community-based organizations.

Under this new benefit, Medicare 

recipients can receive drug coverage 
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by enrolling in a prescription drug 

plan that contracts with Medicare. 

To gain access to this new coverage, 

individuals must specifically enroll in a 

Medicare prescription drug plan. The 

initial open enrollment period for this 

plan runs from November 15, 2005, 

through May 16, 2006. Those enrolling 

after the initial cut-off are likely to pay 

higher monthly premiums, particularly 

if they do not currently have a drug 

plan that covers prescriptions.

Employer- and union-sponsored 

retiree plans may qualify for Medicare 

support if they continue to offer 

prescription drug coverage

Summary 

To better encourage enrollment in the 

Medicare Prescription Drug Coverage plan, 

enhanced education efforts will be 

undertaken to increase public awareness 

and understanding of the benefits.

Calls to Action

Tactics Employed: Public Awareness, Partnerships, 

Quality Materials

6-1 Community groups including social service organizations, professional 

organizations, and faith-based organizations should take advantage of the IRS’s 

Voluntary Income Tax Assistance program.

6-2 In 2006, the Treasury Department and a Federal Reserve Bank will continue 

the national public education campaign, Go Direct. The campaign is designed to 

encourage Americans who receive Federal benefit payments, particularly Social 

Security, to use direct deposit. On an annual basis, the program will be assessed by 

the agencies to determine its effectiveness and viability.

6-3 The Department of Health and Human Services will continue its public awareness 

campaign on the new Medicare drug benefit that encourages seniors to enroll in 

the program. The public awareness campaign began on November 15, 2005 and 

continues until May 16, 2006. The campaign provides eligible taxpayers with easy 

access to information regarding enrollment.

Endnotes

1 Internal Revenue Service. (2005, March). Internal Revenue Service Data Book 2004 (Publication 55B).

Retrieved July 27, 2005, from www.irs.gov/taxstats.

2 National Organization on Disability & Louis Harris and Associates, Inc. (2004). N.O.D./Harris Survey 

of Americans with disabilities. Washington, DC.

3 The Florida Prosperity Plan. (n.d.). Florida Communities Help Families Climb Out Of Poverty. Retrieved 

August 2, 2005, from www.prosperitycampaign.com/floridapc.html.
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Chapter Six: Taxpayer Rights

4 City of Miami. (n.d.). City of Miami’s tax preparation campaign most successful ever. Retrieved August 2, 

2005, from http://www.ci.miami.fl.us/comm/pages/Press_Release/2005_taxpreparation.asp.

5 National Organization on Disability – Louis Harris and Associates, Inc. (2000). N.O.D./Harris Survey 

of Americans with disabilities. Washington, DC.

6 Small Business Tax Credit: IRS Code Section 44, Disabled Access Credit.

7 Architectural/Transportation Tax Deduction: IRS Code Section 190, Barrier Removal.

8 Refers to an individual who has a disability that results in a substantial handicap to employment and 

who has been referred from a vocational rehabilitation facility.

9 Opportunity Tax Credit: IRS Code Section 51, Work Opportunity Tax Credit (WOTC).
59

 Chapter 7

Investor Protection

Overview

Effective investor education can help all 

Americans become better positioned to 

achieve personal financial security and 

reach saving and investing goals such as 

homeownership and college education 

for their children. Over the long term, 

effective participation in our financial 

markets is critical to reaching these goals, 

as well as to achieving overall retirement 

security. A working knowledge of basic 

investing concepts will substantially 

improve an investor’s financial future 

even if the investor participates in 

the markets only through a defined 

contribution retirement plan. Given 

that a recent survey showed that only 

40 percent of investors said they “know 

most of what they need to make good 

decisions,”1 it is clear that more investor 

education will benefit most Americans.

Beyond helping investors understand 

financial concepts, increased investor 

education can yield significant economic 

and social benefits. When consumers 

have the opportunity and ability to invest, 

they infuse the markets with vital capital 

that help businesses and economies grow 

stronger. In turn, these investments in the 

economy ensure that new and creative 

technologies have a chance to develop 

and flourish. Saving and investing can also 

help individuals and families build wealth 

and become more stable and secure.

By actively promoting and supporting 

financial education at all levels — from 
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the basics to the most complex concepts 

— regulators, securities professionals, 

and others can play a key role in assuring 

that all investors get the facts they need 

to invest wisely and avoid costly mistakes.

An important component of investor 

education is helping investors understand 

the salient characteristics of investment 

products. Fees and costs are significant 

attributes for any investment, and 

particularly for those held over time.

While regulators do make available free 

resources to help Americans understand 

characteristics of various investments, 

including information on costs and 

fees, both public and private sectors 

can do more in this important area.

While investing offers significant potential 

rewards, it is not without risk, including the 

possibility of fraud. Unfortunately, financial 

scam artists prey on the willingness of 

some Americans to allow emotion to cloud 

their judgment. Americans lose millions 

of dollars each year to crooks who engage 

in affinity fraud and other financial 

crimes, lying about themselves and the 

products they sell.

2

 Increasingly in our 

global economy, these predators may be 

located off-shore and may not be subject to 

U.S. laws. Educated investors are the best 

defense against investment fraud, because 

knowledgeable consumers are equipped 

to ask questions and steer clear of scams.

Challenges 

Americans can benefit financially by 

increasing their understanding of 

diversification, compound interest, 

and how to evaluate financial products.

An enormous amount of high-quality 

education material is available for free, 

primarily through the Internet. Yet 

many of these excellent materials are 

underutilized and not widely disseminated.

These challenges can be overcome 

by educating investors so that they 

are better able to make appropriate 

financial choices, understand and 

evaluate financial products, and 

protect themselves against fraud.

Issues in Investor Protection

1. Equipping Consumers with Unbiased, 

Neutral Investment Information

To have the best chance for achieving 

personal financial goals, it is important 

for investors to have access to unbiased 

investor education materials. These 

materials should help investors 

understand the questions they should 

ask about investments and their 

investment professionals, where to 

seek additional information, and 

where to turn for help and advice.

Organizations such as the SEC, the 

CFTC, and state securities regulators 

are devoted to investor protection are 

particularly useful sources of this kind of 

neutral, unbiased investor information, 

some of which may also be developed 

through funding from court settlements.

State securities regulators and trade 

associations for industry professionals 

have created several financial education 

campaigns that deliver sought-after 

information through Web sites and other 

programs. Finally, some organizations have 

partnered to develop and disseminate 

tailored messages on investing for African 

American and Hispanic communities.

Securities and Exchange Commission Provides 

Investor Education Resources 

The SEC produces a wide variety of 

helpful publications, calculators, and 

other materials aimed at helping investors 

make informed investment decisions.
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Publications include Get the Facts on Saving 

and Investing, Invest Wisely: An Introduction 

to Mutual Funds, and Variable Annuities: 

What You Should Know. The SEC does not 

copyright any of its investor education 

materials and makes them freely available 

to all. The SEC’s Web site (www.sec.

gov) also gives investors interactive 

tools to help evaluate their investment 

decisions, linking to more than half a 

dozen interactive tools from other Federal 

agencies, self-regulatory organizations, 

and non-profit educational organizations.

Through the Internet, 

the SEC allows investors 

to easily check out their 

investment professionals, 

in a page entitled “Check 

Out Your Broker or 

Adviser.” This page shows 

investors how to access 

free public databases 

containing disciplinary 

and other information 

about brokers and 

investment advisers.

It recommends that 

investors call their state 

securities regulator for 

more information, and 

provides a link to a list of 

relevant phone numbers.

Most brokerage account 

agreements require 

investors to settle any disputes with their 

broker through arbitration rather than 

the courts. The SEC educates investors 

on how to file an arbitration claim and 

how to find a lawyer specializing in 

arbitration claims. Law schools in several 

states provide some investors with legal 

representation through arbitration or 

mediation clinics. These clinics may be 

able to help investors who have smaller 

claims and who are unable to hire a lawyer.

The SEC helps investors contact these 

programs to find the assistance they need.

Commodity Futures Trading Commission 

Provides Online Primer 

The CFTC provides consumers with a 

wealth of background information and 

tools to educate new commodity investors.

The CFTC resources provide investors 

with ongoing and real-time tools that 

help detect potential fraudulent activity.

Through the CFTC Web site (www.CFTC.

gov), the page entitled 

“Before You Trade” 

introduces investors to the 

basics of futures trading 

and the paramount need 

to perform background 

research on the company 

or individual with whom 

they choose to invest, as 

well as links that provide 

direct access to publications 

about trading. The Web 

site also provides access to 

online resources for broker 

registration and background 

information. CFTC 

consumer advisories are 

issued to protect investors 

against possible fraud and 

lists valuable precautions 

investors should take 

before committing funds.

North American Securities Administrators 

Association

State securities regulating organizations 

serve as the voice of state and provincial 

security regulators and focus efforts on 

investor protection. These organizations 

are a source of consumer information 

on avoiding investment fraud. Investor 

education resources available on their Web 
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sites include links to the securities regulator 

in each state. Additionally, to encourage 

investors to take down the specifics of 

any conversation they have with their 

investment broker, a free investor checklist 

identifies the fundamental questions an 

investor should ask before investing. This 

resource also provides tips to consumers, 

such as hanging up on any unsolicited 

telephone offers to buy securities.

Investor Education 

Funds from Court 

Settlements 

In 2003 and 2004, 

settlements of 

Federal court 

litigation matters 

by securities 

regulators resulted 

in court approval 

of $85 million, 

to be paid over 

five years toward 

investor education.

Of this total, $30 million has been 

specifically designated to state securities 

regulators for investor education 

purposes and $55 million for Federal 

efforts. The settlements involved conflicts 

of interest between the research and 

investment banking operations of the 

nation’s top investment firms, with eight 

firms contributing the $85 million.

State Securities Regulators Conduct Outreach 

and Education Programs 

Securities regulators in various states 

have also developed investor education 

campaigns. For instance, securities 

regulators in Florida developed a 

comprehensive public education initiative 

that uses public outreach, a media 

campaign, and a Web site on personal 

finance matters to communicate its 

message effectively. This effort is a result 

of an innovative partnership between 

private sector groups and the Florida 

Department of Financial Services.

Throughout Oklahoma, investor education 

is being integrated with existing financial 

curricula, trainings, workshops, and media 

opportunities, thanks to Winning through 

Investment Strategies and Education (WISE).

WISE was created 

to customize 

and expand the 

Financial Literacy 

2010 teaching 

guide for use 

in Oklahoma.

(Financial Literacy 

2010 is a joint 

project to promote 

financial literacy, 

sponsored by state 

securities agencies 

and other entities.) 

Established by 

the Oklahoma Department of Securities 

and a university outreach program, WISE 

successfully uses television and radio 

programs, free workshops for newly 

married couples, a teachers institute, an 

intergenerational stock camp, and free 

workshops for pre-retirement groups to 

equip Oklahomans with the investment 

knowledge they need to succeed.

Investment Education Programs Targeted toward 

African Americans and Hispanics

Four organizations joined together to 

create a program to strengthen investor 

awareness specifically in the African 

American and Hispanic communities.

Mutual fund industry professionals 

deliver free education and information 

about personal investing at workshops 
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and conferences across the country, 

at Historically Black Colleges and 

Universities, and in interactive Web 

courses in English and Spanish.

Trade Association Sponsors Web Site for Investors

Industry trade associations can help 

provide information to investors. For 

instance, one trade association foundation 

sponsors a Web site 

with information on 

investing and saving 

for retirement. The 

Web site provides 

free information on 

homeownership, 

how markets work, 

diversification, 

and principles of 

asset allocation.

Summary

Effective education can help investors 

achieve long-term financial wellbeing. Through effective investor 

education, Americans can learn to 

understand their own personal risk 

tolerance, investment objectives, and 

time horizon to maximize investment 

opportunities. Many financial services 

entities and community organizations 

focus on helping to educate investors.

State and Federal regulators provide 

excellent resources for all consumers.

2. Encouraging Greater Understanding of 

Investment Characteristics, 

Particularly Fees

Understanding how to research and 

effectively compare characteristics of 

various investments is a critical component 

of investor education. Investors should 

fully understand the types of costs, fees, 

and expenses that may be charged against 

their accounts and the impact of those 

amounts over time. Even small amounts 

can result in to a significant total on 

an investment held for many years.

The SEC has a Mutual Fund Cost 

Calculator on its Web site, while the The 

National Association of Securities Dealers 

(NASD) has a Mutual 

Fund and an Exchange 

Traded Fund Expense 

Analyzer. These easyto-navigate sites allow 

investors to compare 

fees, expenses, and 

other costs of owning 

these products, 

and information is 

available free of charge.

Additionally, DOL has 

information on fees for 

those participating in retirement plans.

SEC’s Mutual Fund Cost Calculator

The SEC created its Mutual Fund Cost 

Calculator to enable investors to easily 

compare fund costs and assess their impact.

Available free of charge at www.sec.gov, 

this Internet-based tool takes the math 

and mystery out of questions like: “Am I 

better off buying a no-load fund with yearly 

expenses of 1.75 percent or a fund with 

a front-end sales charge of 3.5 percent 

and yearly expenses of 0.9 percent?”

The cost calculator estimates mutual fund 

ownership costs by including sales charges 

(loads), annual operating expenses paid 

by investors, and “foregone earnings” 

(money that could have been earned 

had those fees been invested instead).
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National Association of Securities Dealers

The NASD offers investors online 

information through its Mutual Fund and 

an Exchange Traded Fund (ETF) expense 

analyzers. The analyzers are free tools 

to help compare how sales loads, fees, 

commissions, and other fund expenses 

can reduce returns on mutual funds and 

ETFs. The analyzers allow consumers to 

calculate the expenses of up to three funds 

or classes of a single 

fund at the same time.

The organization 

makes its mutual fund 

expense analyzer 

available without 

charge to securities 

firms for use on their 

Intranets as a tool for 

brokers and on their 

public Web sites for 

use by their customers.

U.S. Department of Labor Offers Resources to 

Explain 401(k)s 

Those participating in 401(k) retirement 

plans can also look to the DOL for valuable 

information concerning fees. The DOL 

has developed materials to help both 

employers who sponsor 401(k) plans and 

employees who participate in 401(k) plans 

understand investment fees and 

expenses. These materials are available 

at www.dol.gov/ebsa/publications. The 

materials help consumers understand 

that some fees in 401(k) plans are paid 

by the employer, but others are typically 

paid by the participant in the form of 

net total return for their plan account.

The DOL provides various compliance 

assistance materials and information 

relating to free seminars conducted by the 

DOL addressing fiduciary responsibilities 

regarding plan investments and fees.

In addition, a uniform fee disclosure 

form developed to help employers 

compare the fees of prospective 

providers for their plans is available on 

the DOL’s Web site at www.dol.gov.

Summary 

Investors should review and understand 

the costs, fees and expenses associated 

with various investment products. Investors 

need to understand the 

impact these fees and 

expenses may have on 

the potential growth 

of their investment 

vehicle. This can be 

achieved through 

public education 

and widespread 

dissemination of 

effective information.

3. Protecting Investors from Fraud 

through Increased Education Efforts

Knowledge is one of the best defenses 

against investment fraud. Securities 

regulators caution investors to investigate 

before they invest. Fraudsters rely on 

people not researching investments before 

they invest. In fact, if it sounds too good to 

be true, it probably is. Many free resources 

make it easy to investigate companies, 

products, securities professionals, and 

promoters before making an investment.

Effectively researching and evaluating 

investment choices is key to helping 

Americans avoid fraud. The SEC helps 

Americans understand what investment 

fraud looks like, and how to avoid it. The 

CFTC warns would-be investors about 

potential commodities and futures fraud.
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SEC Uses Interactive Tool to Teach Investors 

about Fraud 

The SEC launched a series of Internetbased initiatives to reach out to would-be 

investors when they are most vulnerable.

By using fake scam Web sites, the SEC 

shows consumers how easy it can be for 

scam artists to gain email addresses, phone 

numbers, mailing addresses, and even 

bank account numbers, wire transfer 

instructions, and credit card information 

from potential investors. The SEC 

individually answers all inquiries coming 

in from these sites, and in many cases 

must invest significant time to convince 

consumers that these investment offers 

are too good to be true and fictitious.

The SEC first began this approach when it 

launched www.McWhortle.com, a site that 

purported to be “an established and wellknown manufacturer” with a revolutionary 

product it planned to produce with the 

money raised through an initial public 

offering. In reality, the company did not 

exist (it was made up by the SEC), and 

any consumer who tried to “invest now” 

was greeted with an educational message 

warning of the danger of such scams.

Within weeks of its launch, the Web site 

received more than 1.5 million hits and 

the McWhortle Webmaster (actually SEC 

staff) received more than 500 e-mails, 

nearly all of which were overwhelmingly 

positive about the fake opportunity. The 

SEC has worked with teachers to include 

McWhortle in teaching modules and 

curricula, using it as a tool for separating 

the good from the bad on the Internet.

The SEC also publishes brochures, in 

print and on its Web site, on how to 

avoid investment fraud. Additionally, 

SEC staff conducts investor protection 

seminars and workshops for investor 

groups around the country. 

Commodity Futures Trading Commission 

Provides Fraud Avoidance Tips 

The CFTC publishes information 

designed to help consumers avoid 

commodities fraud at www.cftc.gov/opa/

opaconsumeradv0404.htm. Investors are 

warned to be wary of any firm that offers 

to sell commodities or commodity futures 

or options, particularly where the sales 

pitch stresses high returns and low risks.

The CFTC also warns consumers about 

firms that claim to have made profits 

for all of their customers, advising that 

“get-rich-quick schemes, including those 

involving foreign currency trading, tend 

to be frauds.” The CFTC Web site also 

allows investors to electronically report 

any suspicious activities or transactions.

Summary 

Through education, Americans can 

become aware of different types 

of fraudulent investment schemes, 

while becoming more savvy and 

knowledgeable consumers of 

investment products in general.
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Calls to Action

Tactics Employed: Quality Materials, Public Awareness 

7-1 Investors should take advantage of the wealth of high quality, neutral, and unbiased 

information offered free of charge.

7-2 During the meeting hosted by the Treasury Department and the Department of 

Labor (see 3-1), the topics of discussion will include an educational emphasis on 

investment fees. Attendess will discuss how to present information on fees in a 

clear and understandable manner.

Endnotes

1 Securities Industry Association. (November 2004). Annual SIA investor survey. New York, NY: 

Securities Industry Association Publications.

2 Federal Trade Commission. (August 2004). Consumer fraud in the United States: An FTC survey.

Washington, DC: Bureaus of Economics and Consumer Protection Federal Trade Commission.
67

Chapter 8

The Unbanked 

Overview

Though the opportunities to participate in 

the United States’ banking system continue 

to grow, the benefits of such participation 

are yet unrealized: More than 10 million 

individuals in the United States still do 

not maintain traditional bank transaction, 

credit, saving, or investment accounts.

1

 In 

fact, according to the FRB’s 2001 Survey 

of Consumer Finances, nearly 10 percent 

of U.S. families do not have transaction 

accounts and more than 12 percent lack 

checking accounts.

2

 Many more Americans 

may have transaction accounts but do 

not take advantage of available options 

that are offered to them, and instead use 

alternative financial service providers.

The term “unbanked” is widely used to 

describe individuals who do not have 

a transaction account with any type of 

traditional financial institution, not just a 

bank. The term also includes people who 

do not have accounts at credit unions, 

thrifts, or other traditional depository 

institutions. This National Strategy adopts 

the common, broader usage of the term 

“unbanked” which refers to individuals 

without an established relationship with a 

depository institution. These individuals 

can also be described as operating 

outside of the financial mainstream.

3
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According to a 2003 survey of 46 banks, 

more than 98 percent of the banks 

surveyed provided some type of financial 

education program; however, many of these 

programs pertain to people who already 

use financial services. For example, 96 

percent of banks provided homeownership 

and mortgage counseling; 93 percent 

offered affordable mortgage programs; 

and 91 percent offered credit counseling.

In contrast, only 57 percent of banks 

surveyed offered education programs 

that specifically target the unbanked.

4

 

Challenges 

Individuals who have not established a 

relationship with a depository institution 

turn away from traditional financial 

services for a number of reasons, including 

cultural differences (see Chapter 9 for 

more information), language barriers, 

a lack of trust in financial institutions, 

insufficient knowledge of products and 

services available, or insufficient assessment 

of their own financial needs. These 

individuals also tend not to use traditional 

depository institutions (e.g., banks, 

credit unions, thrifts, etc.). Many factors 

contribute to people’s reluctance: whether 

a result of lack of money, an absence of 

convenient locations, or the (mistaken) 

view that writing just a few checks a month 

does not warrant the need for a bank 

account, various barriers to participation 

in the traditional financial system must be 

considered when constructing meaningful 

financial education efforts. One such 

barrier is the ready availability of alternative 

services, such as check cashing services.

Moreover, some depository institutions 

may not offer products that are suitable 

for many of the unbanked. For example, 

checking account products may require 

high minimum balances, which preclude 

low-income consumers from effectively 

using them. While these challenges can be 

overcome through industry-driven financial 

products and services, it is essential to 

establish and expand public-private and 

private-private partnerships committed to 

financial education activities specifically 

tailored to the unbanked. These activities 

might include ongoing national and 

local public awareness campaigns that 

prioritize educating those outside the 

financial mainstream on the availability 

and benefits of financial services.

Issues for the Unbanked

1. Using Banking Industry-Driven 

Products and Services to Increase 

Understanding and Utilization

Cultural differences may initially impede 

those outside the financial mainstream 

from turning to traditional financial 

services. In addition to some distrust of 

banks among the unbanked, many banking 

products are not well-designed to meet the 

needs of low-income immigrants — the 

largest group likely to be among those 

individuals considered to be unbanked.

They turn instead to alternative financial 

services, such as wire transfer companies 

and currency exchanges, to send money 

to relatives because they may not view U.S.

banks as providers of similar services. In 

2004 alone, immigrants in the U.S. sent 

approximately $35 billion to countries 

in Latin America and the Caribbean 

— representing the biggest share of 

immigrants in the U.S.

5

 Further, monthly 

fees and minimum balances may inhibit or 

otherwise preclude low-income individuals, 

particularly immigrants, from opening 

checking accounts, in addition to mortgage 

products with down payment requirements.
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As the products and services made available 

through the U.S. banking (traditional 

depository) system increase, opportunities 

exist to help individuals outside of the 

financial mainstream learn about and 

understand what is available to them 

through local institutions. For example, 

remittance programs to send money to 

native countries, branch offices with special 

services, “starter” checking accounts, fixed 

value contribution accounts, depositsecured loans, 

secured credit cards 

for those with no 

credit history, and 

employer payroll 

debit/ATM cards 

may, depending 

on how these plans 

are structured, 

serve as good 

introductory services 

for this group.

6

 A 

combination of 

traditional and nontraditional depository 

institution services (e.g., money orders, 

domestic and international wire transfers 

and sale of pre-paid phone cards) may also 

be included by the financial system as it 

develops and distributes the products that 

may help meet the needs of the unbanked.

Community-based efforts such as Access 

Across America, First Home Club Savings 

Program, and locally based saving 

accounts that offer matching funds 

enable individuals without an established 

relationship with a depository institution 

to turn to U.S. financial institutions for 

specific products and programs of value.

Credit Unions Reaching Out to the Unbanked 

through Access Across America

Access Across America, an initiative of 

the NCUA, was established to create 

economic empowerment and facilitate 

the extension of affordable financial 

services to individuals and communities 

across the nation.  NCUA partners with 

Federal agencies to develop opportunities 

to assist credit unions with the resources 

needed to serve underserved areas. Since 

2000, through the NCUA’s streamlined 

regulatory framework, more than 

700 credit unions have adopted over 

1,200 underserved areas, providing 

access to credit union service to more 

than 100 million 

Americans. Access 

Across America has 

forged partnership 

opportunities for 

credit unions to 

make the ownership 

society a reality 

for millions of 

Americans who might 

otherwise be left 

out.  The initiative 

focuses on key areas 

such as homeownership, Health Savings 

Accounts, small business lending, financial 

education and serving the underserved.

First Home Club Savings Program

For those unaccustomed to saving through 

traditional depository institutions, the 

concept represents an easy-to-implement, 

understandable account program designed 

to move individuals toward acquiring 

basic financial services. To introduce 

people to available services, banks that 

participate in a First Home Club Savings 

Account Program provide low- and moderateincome individuals the tools and support 

to help them achieve homeownership.

Club members maintain a dedicated 

saving account designated for the down 

payment and closing costs on a first home.

Club members must participate in both 

group and individual education sessions.
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Finally, when participants complete the 

program, the Club matches their savings 

at a three-to-one ratio up to $5,000.

Saving Accounts with Matching Funds

Saving for a down payment on a home 

can be overwhelming for anyone, but 

particularly for those individuals who are 

unfamiliar with traditional depository 

institution saving plans. To encourage and 

support such saving among residents of 

a city in New York, the local banks along 

with the city housing authority encourage 

citizens to save by offering saving with 

matching funds; in this way, individuals 

can begin saving funds toward a down 

payment on a house. Participants set a 

saving goal and make regular deposits 

over a pre-determined period of time.

When the individual goal is met, the 

housing authority, an affordable housing 

organization, matches the deposited funds.

As an added incentive, the saving account 

is free of traditional service charges.

Summary

The financial industry can open new 

doors for individuals and strengthen 

local communities by developing 

innovative financial products and services 

that meet the needs of individuals 

without a relationship with a depository 

institution at the pre-banking, entry 

and advanced banking service levels. 

2. Encouraging Collaboration and Use 

of Existing Relationships to Increase 

Familiarity with Financial System

Some immigrants harbor a distrust of the 

U.S. financial system, perhaps as a result 

of instability of the financial systems in 

their home countries or for other reasons.

This reluctance to access financial services 

is exacerbated by language barriers that 

prevent depository institutions and other 

organizations from properly educating 

consumers on available programs and 

services. Other unbanked individuals may 

be wary of financial institutions due to 

distant location, past negative experiences, 

concern that saving will affect their ability 

to receive government benefits, or other 

factors. By working with individuals in a 

collegial environment, local partnerships 

can help people acquire the financial 

skills necessary to reach objectives such as 

securing a job, buying a house or saving 

toward a personal goal. This is evident in 

the success of efforts such as Money Smart

and the HHS’ Assets for Independence.

Money Smart Financial Education Program

To expand the reach of financial services 

to the growing ranks of those groups 

considered to be unbanked, the FDIC is 

collaborating with public- and privatesector organizations to promote Money 

Smart and the range of financial education 

resources and services it provides. Money 

Smart is a comprehensive adult financial 

education curriculum designed to help 

low- and moderate-income individuals 

outside of the financial mainstream 

develop financial skills and positive 

banking relationships. Linked with other 

asset building programs, the FDIC is 

able to provide an easily understood, 

multilanguage, multimedia program.

Money Smart is available free of charge 

and without copyright restrictions in 

English, Spanish, Chinese, Korean and 

Vietnamese (www.fdic.gov/consumers/

consumer/moneysmart). FDIC has 

linked many banks to community groups 

through Money Smart, establishing 

nearly 1,200 public-private partnerships 
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nationwide that have increased the 

reach of its financial education efforts.

At the Federal level, FDIC has partnered 

with the IRS to link Voluntary Income Tax 

Assistance (VITA) sites to Money Smart

Model Sites, where financial education 

is taught on a regular 

basis and generates 

active participants.

These partnerships work 

together to increase 

awareness among lowincome consumers about 

eligibility for tax credits 

such as the Earned 

Income Tax Credit 

(EITC). VITA sites also 

offer free tax help to 

eligible wage earners 

and help consumers 

obtain applicable tax 

credits. In 2004, FDIC 

Money Smart Model Site 

partners helped 3,435 

families file EITC claims 

totaling more than $5.1 

million (an average 

of $1,485 per family).

7

Also on the Federal level, FDIC has 

partnered with DOL’s Employment and 

Training Administration through their 

one-stop career centers to offer Money 

Smart as part of their programs that 

target populations likely to be outside the 

financial mainstream, such as welfareto-work participants, individuals with no 

access to mainstream financial service 

providers, public housing residents, 

immigrants and low-income homebuyers.

At the community level, Money Smart has 

brought together FDIC and a national 

nonprofit housing organization to help 

revitalize communities across the United 

States through financial education 

efforts. This organization has been 

using the Money Smart curriculum to 

train educators from local nonprofit 

organizations who will teach between 

1,000 and 2,000 students each year.

8

 

At the regional level, FDIC’s Kansas City 

Region has worked with 270 partners and 

community development 

collaborators in the 

region to facilitate 18,000 

low-income individuals’ 

attendance at Money Smart

classes. As a result, 9,500 

low-income households, 

including immigrants, 

have opened deposit 

accounts and saved $2.25 

million over a two-year 

period.  These figures 

include 724 Individual 

Development Accounts 

(IDAs) that make two-toone matching funds to 

families’ deposit accounts.

The funds may only be 

used by participants 

for certain purposes, 

such as buying a home 

for the first time, going to college or 

vocational/technical school or opening 

a small business.  All IDA participants 

in some locations attend Money Smart

classes as a requirement to access funds.

9

Overall, Money Smart has helped 

more than over 300,000 consumers, 

resulting in the formation of 80,000 

new depository account relationships.

Americans Enter the Financial Mainstream 

through U.S. Department of Health and Human 

Services Program

The Office of Community Services, 

Administration for Children and 

Families, HHS, administers the Assets for 

Independence Program, which currently 
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provides grants to support more than 300 

IDA10 projects throughout the nation.

Each project features strong partnership 

arrangements between a communitybased entity or a state or local government 

agency and a private-sector bank or 

credit union. Several national banking 

organizations are supporting the IDA 

concept through their local affiliates.

IDAs are special restricted bank or 

credit union accounts that enable lowincome individuals and families to save 

earned income and receive matching 

funds of up to $2,000 per individual.

Participants use their accumulated saving 

plus the IDA matching funds to acquire 

a long-term asset, such as a first home or 

micro-business or to enroll for or obtain 

higher education. IDA customers receive 

financial education, and credit and debt 

counseling, along with other supportive 

services to ensure their long-term success.

For many participants, the IDA is their 

first saving or checking account.

Summary

Financial literacy information and 

resources can be delivered directly 

to those without a relationship to a 

financial institution, the unbanked, 

through collaborative community 

partnerships. Both public-private 

and private-private partnerships can 

play valuable roles in this effort.

Call to Action

Tactics Employed: Quality Materials, Partnerships 

8-1 Between the second quarter of 2006 and the third quarter of 2007, the U.S.

Department of the Treasury, along with the Federal Deposit Insurance Corporation, 

the National Credit Union Administration, and the Office of the Comptroller of the 

Currency, will host a series of four regional conferences to share best practices on 

banking of the unbanked. The conferences will bring together community-based 

organizations, financial service providers, and Federal, state, and local regulators to 

broker partnerships and discuss the latest developments and strategies in bringing 

people into the financial mainstream.

Endnotes

1 Braunstein, S. & Welch, C. (2002, November). Financial literacy: An overview of practice, research, and 

policy (Federal Reserve Bulletin). Washington, DC: Federal Reserve Board.

2 Ibid.

3 Transaction accounts form a comprehensive category comprising checking, saving and money 

market deposit accounts, as well as money market mutual funds and call accounts at brokerage 

firms. Instead of using the term “unbanked,” some financial institutions may refer to these 

individuals as consumers in the sub-prime market or as the “underserved.” For more information, 

see Samuels, G. (2003, Fall). Banking unbanked immigrants through remittances. Boston, MA: Federal 

Reserve Bank of Boston.
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4 Consumer Bankers Association. (2003, April). CBA 2003 survey of bank-sponsored financial literacy 

programs. Retrieved April 2003 from www.cbanet.org.

5 Terry, D.F. (in press). Remittances as a development tool. In D.F. Terry & S.R. Wilson (Eds.), Beyond 

small change: Making migrant remittances count. Washington, D.C: Inter-American Development Bank.

6 Frumkin, S. (2005, September). Remittances: A gateway to banking for unbanked immigrants. Office of 

the Comptroller of the Currency, Community Developments Insights. Retrieved May 26, 2005, from 

www.occ.treas.gov/cdd/Remittances1.pdf.

7 Federal Deposit Insurance Corporation (FDIC). (2005, January). FDIC and IRS partner in promoting 

access and financial education to workers eligible for earned income tax credits. (Press Release). Retrieved 

July 27, 2005, from www.fdic.gov/consumers/consumer/moneysmart/press/2005/mspr105.html.

8 Federal Deposit Insurance Corporation (FDIC). (2002, April). FDIC and Neighborhood Reinvestment 

Corporation announce program to promote financial education and homeownership (Press Release) 

Retrieved from www.fdic.gov/news/news/press/2002/pr4202.html.

9 Riddle, Julie. (personal communications) (n.d.). Retrieved July 27, 2005, from www.

thefamilyconservancy.org/life/fab.htm Connell, Kelly Moema. (personal communications) (n.d.).

Retrieved July 27, 2005, from www.elcentroinc.com/english/special_initiatives/programs_soon.

html.

10 For more information on IDAs, see Office of the Comptroller of the Currency, Community 

Developments Insights. (2005, February). Individual Development Accounts: An Asset Building Product 

for Lower-Income Consumers. Howard, S. and Frumkin, S. Retrieved from: www.occ.treas.gov/ftp/

release/2005-25a.pdf or www.acf.hhs.gov/assetbuilding/about.html.
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75

Chapter 9

Multilingual and Multicultural Populations

Overview

Throughout the nation, minority markets 

serve as an important area of growth for 

the American economy. The financial 

services community looks to minority 

markets as areas for demonstrable growth, 

particularly with their projected buying 

power. Projections from 2004 to 2009 

indicate: an Asian buying power gain 

of 45 percent; a Hispanic buying power 

gain of 45 percent; an American Indian 

buying power gain of 38 percent; an 

African American buying power gain of 33 

percent; and a multi-racial buying power 

gain of 30 percent. By comparison, the 

buying power of Caucasian Americans 

is projected to rise by only 27 percent 

in the same five-year time period.

1

Such projected increases in buying power 

of minority populations are expected to 

result in a combined minority buying 

power of $3 trillion by 2009.

2

 However, 

despite minority populations’ significant 

contribution to the national economy, the 

immigrants among them are less likely to 

participate in mainstream financial services 

than are native-born populations.

3

 Among 

Mexican immigrants, 53 percent do not 

hold transaction accounts, while 37 percent 

of other Latin Americans are without 

accounts. Similarly, 20 percent of Asians 

and 17 percent of European immigrants 

do not hold transaction accounts.
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While the homeownership rate among 

minority households is higher than it has 

ever been, minority populations still are 

not purchasing homes at rates similar 

to other groups. In the past 10 years 

(1995 through the first quarter of 2005), 

the Caucasian homeownership rate has 

increased from 71 percent to 76 percent, 

the African-American homeownership 

rate has increased from 43 percent to 49 

percent, and the Hispanic homeownership 

rate has increased from 42 percent 

to 50 percent.

4

 Similarly, from 1994 

through 2004, the Indian/Aleut/Eskimo 

homeownership rate increased from 52 

percent to 56 percent and the Asian or 

Pacific Islander homeownership rate rose 

from 51 percent to 60 percent.

5

 While part 

of the disparity in homeownership rates 

across minority and Caucasian populations 

can be explained in part by limited access 

to financial services and products for 

those sectors of the population who reside 

in remote communities, fundamental 

cultural differences may bear a far greater 

impact and must be recognized. To 

connect effectively, financial education 

programs to multilingual and multicultural 

populations must also be accommodated.

Challenges

As minority markets become a larger 

and more powerful segment of the U.S.

economy, it is important that minority 

populations take full advantage of the 

financial services and opportunities 

available to them. Whether it is because 

they are not participating in financial 

markets, doubt the possibility of 

homeownership, or face other hurdles, 

minority populations face specific 

challenges with regard to accessing 

needed financial services. Despite these 

challenges, steps can be taken to improve 

understanding and utilization of financial 

services, and encourage homeownership.

Issues for Multilingual and 

Multicultural Populations

1. Promoting Participation in the 

Financial Services Process through 

Increased Understanding of the System

Because financial issues and education vary 

across cultures, acquiring an understanding 

of these differences is critical to 

increasing the role of minority markets 

in areas such as transaction accounts and 

homeownership. For some, there is a lack 

of trust of banks and government agencies.

Others have varying attitudes toward 

spending and saving, and may use intracultural financial mechanisms such as peer 

lending and investing groups within their 

communities. Still others must adhere to 

religious restrictions, such as the Islamic 

prohibition on the payment of interest.

Moving beyond these differences 

also requires overcoming language 

and cultural barriers when delivering 

financial education and financial 

services. Through careful research and 

innovative programs, sectors can better 

understand the needs of minority/ethnic 

communities while promoting greater 

consumer knowledge of financial services 

and consumer protection rights.

To gain an improved understanding of 

financial service offerings, many consumers 

look to groups with which they are familiar 

and trust. Through partnerships with key 

organizations and institutions — including 

employers, consulates, religious leaders/

houses of worship, community groups, 

community colleges, and schools — public 

education efforts can develop strategies to 

work effectively with minority markets.
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Successful educational strategies should 

be consistent with cultural priorities and 

norms, and offer a range of activities, 

including inter-generational classes, youthfocused education, and family-based 

learning. By gaining trust in mainstream 

financial service providers, consumers, for 

instance, can learn the differences between 

banks, credit unions, and other financial 

service providers and understand how to 

shop for financial products and services.

Programs such 

as the FDIC’s 

New Alliance Task 

Force (NATF), 

DOL’s Las Mujeres 

y el Dinero, a 

credit education 

and financial 

counseling agency 

targeted to serve 

immigrants, 

and a Texas 

credit union 

targeted to serve 

government employees, demonstrate 

how building strategic partnerships can 

empower communities in need to deliver 

successfully a wide range of linguistically 

and culturally responsive financial 

services and education programs.

FDIC’s New Alliance Task Force Helps Hispanics 

Access Financial Services

To equip the Hispanic population with 

specific, understandable information on 

the benefits and importance of holding 

financial accounts, the credit process, and 

mainstream banking, the FDIC’s NATF

brings together public and private sector 

organizations to help increase the number 

of Hispanics in the financial system.

 6 

FDIC’s NATF is a broad based coalition of 

banks, community based organizations, 

and others, providing Hispanics with the 

necessary financial education and support 

services to improve their access to the 

formal banking system. For example, 

in FDIC’s Chicago Region, the NATF’s 

Financial Education Working Group educates 

Hispanics on the benefits and importance 

of establishing a financial account, the 

credit process, and mainstream banking 

as an alternative to the “fringe” banking 

system. Ten thousand Hispanics have 

participated in financial education classes 

and workshops.

Fifteen NATF

banks in the 

Midwest are now 

offering products 

with remittance 

services that allow 

Hispanics to open 

bank accounts, 

avoid high-cost wire 

services, and incur 

lower remittance 

costs for sending 

money back home.

7

 

During 2003 and 2004, 50,000 new 

accounts totaling $100 million (with an 

average account balance of $2,000) were 

opened at NATF banks in the Midwest.

8 

U.S. Department of Labor’s Las Mujeres y 

el Dinero Brings Financial Education to 

Hispanic Women

Between October 2003 and October 2004 

the Women’s Bureau of DOL sponsored 

Las Mujeres y el Dinero (Women and 

Money), a series of financial education 

conferences that targeted Hispanic 

women. The conferences, held in each of 

DOL’s 10 regions, included motivational 

speakers and educational workshops.

The conferences reached over 4,000 

Hispanic women in Texas; Florida; 

Pennsylvania; Washington; Connecticut; 

Missouri; Ohio; Colorado; and New York.
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Minnesota Counseling Agency Assists Muslims 

with Financial Issues

Through education and communication 

with local bankers and financial 

institutions, one credit education and 

financial counseling agency identifies 

resources able to assist Muslims in reaching 

their goals of purchasing homes, buying 

cars and owning businesses without 

violating their religious beliefs. Based in 

Minnesota, the agency has served more 

than 10,000 immigrants and refugees from 

the African community, helping them 

navigate the American financial system.

Since 2000, the agency has provided a 

range of financial 

education on a 

variety of issues, 

including budgeting, 

banking, credit 

management, 

homebuying, 

investing, and tax 

filing. The agency 

also provides 

financial education 

to women through 

a center established to serve the economic 

development needs and to build the 

financial acumen of immigrant women. 

Texas Credit Union Promotes Low-Cost 

Remittance Service

A Texas-based credit union targeted to 

government employees located on the 

United States-Mexico border serves a 

largely Hispanic membership. The credit 

union joined a major remittance network 

in October 2000 to offer members of the 

local community a safe alternative to more 

expensive wire transfer services. Remittance 

transactions are conducted in dedicated 

space within the credit union branch by 

bilingual employees who specialize in 

providing the service. For the credit union, 

the remittance service has helped build 

relationships and attracted underserved 

immigrants into the formal financial sector.

Summary

By working with leaders in multilingual 

and multicultural communities and 

building partnerships across publicprivate and private-private organizations, 

neighborhoods can ensure that cultural 

issues are properly addressed. Local leaders 

are particularly adept at identifying cultural 

norms, legal and government issues, 

information and product 

needs, effective delivery 

channels, and essential 

languages needed for 

successfully delivering 

financial education 

to minority markets.

Through a commitment 

to increasing participation 

in mainstream 

financial services, 

community leaders 

are making an investment in the 

residents of their community.

2. Changing Perceptions about the 

Accessibility of Homeownership

Homeownership is an important part 

of financial security for all communities 

and markets. But for some, the process of 

buying and keeping a home is daunting.

To better encourage homeownership in 

minority communities, education efforts 

should address language barriers and 

cultural influences, as well as possible 

misinformation. Through counseling, 

access to interpreters, homebuying and 

homeownership classes, and education 

programs offered in a variety of languages 
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and at various cultural-specific venues, 

homeownership can become a reality 

for those in minority markets.

To help overcome the language barriers 

that may keep potential homeowners 

from fulfilling their dreams, initiatives 

such as a Midwestern homeownership 

resource center have successfully provided 

homeownership information and guidance 

in the languages needed by local residents.

Homeownership Center Employs Multilingual 

Resources to Promote Homeownership 

in Minnesota

Through native language classes and 

materials, more and more minority sector 

consumers in two cities in Minnesota are 

learning how to make homeownership 

a reality. The center provides dedicated 

interpreting services to consumers in 

need.

9

 To assist 

English language 

learners, housing 

providers are 

able to tap the 

center’s cadre 

of interpreters, 

all trained in 

homeownership 

essentials 

and financial 

terminology.

The center offers 

homebuyer 

education 

classes for area 

residents in 

Spanish, Cambodian, Russian, and 

Hmong. Additionally, the center works 

in partnership with a wide range of 

private and public sector organizations 

and the two cities of Minnesota where, 

together, they are working to improve 

and standardize financial education 

efforts for minority populations while 

supporting high-quality counseling.

Summary

To increase homeownership in 

minority markets, local communities 

must work together to create and 

distribute home-buying materials 

and services in native languages.

3. Improving Access to Financial Services 

Minority markets also face a number of 

obstacles to financial services, including 

physical proximity. In some communities, 

such as Native American reservations and 

ethnically concentrated neighborhoods, 

there may not be an abundance of 

financial institutions. These communities 

seek specific strategies 

to help them better 

secure the financial 

services resources, while 

gaining the products, 

underwriting, and 

delivery mechanisms 

that are culturally 

compatible.

In minority markets, 

successful financial 

behaviors are more 

likely to occur when 

citizens gain an 

increased knowledge 

and understanding 

of financial issues, 

and are provided the physical access to 

those services that are most beneficial.

By working through the public school 

system, English language providers, 

citizenship education centers, recreation 

organizations, and tax preparation sites, 

public and private sector organizations 
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can increase access to financial services 

for underserved communities. Efforts 

such as the President’s Financial Literacy 

Initiative and a Native American financial 

literacy program have demonstrated what 

is possible through improved access.

President Bush’s Financial Literacy Initiative

Understanding the need for greater 

financial literacy in America that 

incorporates a specialized focus on 

increasing Hispanic ownership of financial 

assets, on May 4, 2005, President George 

W. Bush called upon agencies to serve 

on the first national public-private 

partnership with the Hispanic community.

The Commission, led by the Treasury 

Department, the FDIC, and the SBA, 

will work with Hispanic groups, business 

associations, and the private sector to reach 

populations that traditionally have lacked 

financial education resources. The FDIC 

conducted a major advertising campaign 

for promoting the use of the Money Smart 

curriculum and offering local classes 

through FDIC’s regional network and 

Hispanic groups. The SBA will continue to 

create Web-based instruction on its Spanish 

site www.sba.gov/espanol/. The Treasury 

Department will work with the Commission 

to maintain the availability of Spanish 

language materials on MyMoney.gov and 

the 1-888-MyMoney hotline.

Coalition Creates and Implements Customized 

Program to Build Financial Skills in Native 

American Families

Created by a coalition of community 

groups and foundations, one 

program provides Native American 

families with specific lessons to develop 

personal financial skills while embracing 

native traditions and values. Through a 

specifically designed curriculum, Native 

Americans receive the information, 

guidance, and assistance they need to 

help improve their financial standing.

As part of this effort, community 

members are offered a range of program 

modules, including Building a Healthy 

Economy, Developing a Spending Plan, 

Working with Checking and Saving Accounts, 

Understanding Credit and Your Credit 

Reports, and How to Access Credit. Educators 

also are provided an instructor’s guide 

and participant workbooks to help 

Native American families strengthen 

their personal financial skills.

Summary

For geographically remote and 

underserved areas of the country, 

consumers need increased physical 

access to the banks and other financial 

services necessary for proper financial 

planning, saving, and investment.
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Call to Action

Tactics Employed: Public Awareness, Targeting 

9-1 Between the fourth quarter of 2006 and the fourth quarter of 2007, the Treasury 

Department will host a series of roundtables on financial education topics of 

special concern to specific communities. The goal of each roundtable will be to 

raise awareness of the important financial education topics within the specific 

community highlighted.

Endnotes

1 Selig Center for Economic Growth, University of Georgia. (2004, Third Quarter). The multicultural 

economy 2004: America’s minority buying power. (Georgia Business and Economic Conditions, 63)(3).

Retrieved July 27, 2005, from www.selig.uga.edu/forecast/GBEC/GBEC043Q.pdf 

2 Ibid.

3 Berry, Michael B. (Ed.). (2004, October). Financial access for immigrant’s conference: Learning 

from diverse perspectives (Special issue). [Electronic version]. Profitwise News and Views. Retrieved 

July 27, 2005, from www.chicagofed.org/community_development/files/10_2004_pnv_session.pdf

4 U.S. Census Bureau, (2005, April 25). Census Bureau Reports on Residential Vacancies and 

Homeownership. Retrieved August 2, 2005, from www.census.gov/hhes/www/housing/hvs/

qtr105/q105prss.pdf 

5 U.S. Census Bureau, www.census.gov/hhes/www/housing/hvs/annual04/ann04t20.html 

6 Frias, M. (2004, Winter). Linking international remittance flows to financial services: Tapping the 

Latino immigrant market. Supervisory Insights, 22-23. Retrieved from: www.fdic.gov/regulations/

examinations/supervisory/insights/siwin04/latino_mkt.html

7 Orozco, Manuel. (2004). The Remittance Marketplace: Prices, Policy and Financial Institutions (Pew 

Hispanic Center Report). Washington, DC: Georgetown University. Institute for the Study of 

Internal Migration.

8 Frias, M. (2004,Winter). 

9 Neighborhood Reinvestment Corporation, The NeighborWorks America® Network, and the 

NeighborWorks America® Campaign for Homeownership 2002. (2001) Winning Strategies: Best 

Practices in the Work of Homeownership Promotion. Washington, DC: Neighborhood Reinvestment 

Corporation.
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83

Chapter 10 

Kindergarten - Postsecondary 

Financial Education

Overview

“Like all learning, financial education is 

a process that should begin at an early 

age and continue throughout life. This 

cumulative process builds the skills 

necessary for making critical financial 

decisions that affect one’s ability to attain 

the assets, such as education, property, 

and savings, that improve economic 

well-being.”1

 While few would dispute 

former Federal Reserve Chairman 

Alan Greenspan’s statement, the truth 

is that for many of America’s youth, 

financial literacy is still not a reality.

Each year, young Americans spend 

roughly $150 billion, yet they do not have 

a strong understanding of basic financial 

concepts such as annual percentage rates, 

inflation, and interest.

2

 According to 

a survey on personal financial literacy 

administered in 2004, high school 

seniors answered just more than 50 

percent of the financial literacy questions 

correctly.

3

 While this demonstrated an 

increased aptitude on the issues for the 

first time since 1997, 66 percent of high 

school seniors still failed the exam.

4

The survey results indicate that those 

students who successfully answered survey 

questions had something in common.

Those seniors who attended money 

management courses in high school 

fared better than those who did not. In 
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schools that 

required financial 

literacy classes 

for all students, 

55 percent of 

the financial 

literacy questions 

were answered 

correctly.

5

 The 

percentage of 

correct survey 

responses on 

financial literacy 

topics dipped 

to 51 percent in schools that required 

financial education only for some 

high school students, and 53 percent 

where money management was taught 

to students as an elective course.

6

The survey results also indicate that the 

majority of participants (58 percent) 

learn most of their money management 

skills at home.

7

 By comparison, 20 

percent said they learned such skills 

at school and 18 percent said they 

learned from personal experience.

8

Struggles with financial literacy are not 

limited to high school students. According 

to the Department of Education’s National 

Center for Education Statistics, more 

students who dropped out of college cited 

financial reasons, rather than academic 

ones, for their decision.

9

 While there 

are many financial reasons that might 

contribute to a student dropping out 

of school, one of the factors may be the 

college students’ inability to plan and 

manage their finances in ways that enable 

them to meet the expenses of college.

Challenges

Data gathered by various organizations 

demonstrate real challenges in financial 

literacy among 

youth, particularly 

during their formal 

education years.

Some of these 

challenges include 

finding room for 

financial education 

in the school day, 

the lack of teacher 

preparedness on 

the issue, and a 

lack of awareness of 

effective materials 

and curricula. While the K-12 

environment is key to addressing the 

need for more financial education, 

non-school venues and college-level 

programs also offer promising options.

Issues in K–Postsecondary 

Financial Education

1. Finding Room for Financial Education 

in K-12 Curricula through Integration

While many educators now understand 

the importance of teaching students basic 

money skills, often tightly regimented 

course schedules do not allow for the 

development of a separate, new course 

to meet this newly recognized priority.

Typically, established core curricula 

consume most of the school day, leaving 

educators with little time to help their 

students become financially literate.

It may appear that subjects like math, 

science, social studies, economics, history, 

family and consumer science, and english 

all compete with financial education for 

precious space in a school’s curricula, and 

that adding financial education would 

necessitate dropping some other discipline.

But just the opposite is true — integration 

of financial education into established 
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curricula permits schools 

and educators to meet their 

obligations to teach required 

courses while simultaneously 

exposing students to valuable 

financial literacy lessons.

For example, second graders 

learning basic addition 

can use coins not only to 

understand the value of 

money, but also to begin 

practicing their arithmetic.

Middle school students 

studying percentages in math 

class can be taught about 

the compounding of interest 

rates. High school freshmen studying the 

Great Depression in history class can learn 

about the rise of the modern banking 

system and the Social Security system. High 

school seniors in a family and consumer 

science course can learn about how credit 

works while receiving instruction on how 

to shop for major purchases like cars and 

homes. Not only does this save precious 

class time, but the integration of financial 

education into “real world” contexts also 

carries the potential to attract students’ 

interest and facilitate their learning.

In schools across the United States, 

students benefit from the integration 

of financial education into core 

subjects. Nonprofit organizations and 

the Federal government have played 

a role in developing materials and 

curriculum, such as Money Math: Lessons 

for Life. Moreover, other organizations 

have developed classroom newspapers 

that enable educators to use the news 

and trends of the business world to 

convey meaningful lessons to students.

Educators and policymakers can also 

use the guidance contained in the 

Treasury Department’s White Paper on 

Financial Education Integration when 

designing their own models for bringing 

financial knowledge to their students.

Nonprofit Organization Uses Volunteer 

Executives and Specialized Materials to Integrate 

Free Enterprise Topics in the Classroom 

Through the use of volunteers and 

rigorously tested materials, an international 

nonprofit organization committed to 

providing every child with a fundamental 

understanding of the free enterprise 

system, also supports teachers’ efforts to 

integrate financial education into a wide 

variety of courses. These courses include 

economics, business, career development, 

consumer/home economics/family & 

consumer sciences, American history, 

geography, government, mathematics, 

and world history. Coordinating closely 

with the classroom teacher, trained 

volunteers offer a real-world perspective on 

financially literate behavior for students.

Positioned as in-class or after-school role 

models, the volunteers usually come from 

the business sector and work to support 

teachers and reinforce teaching concepts 

through frequent, coordinated classroom 

visits over the course of an academic 

semester. Volunteers deliver programming 
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that helps students understand the 

“economics of life.” The organization’s 

program kits include classroom 

materials, supplies, and corresponding 

student, volunteer, and teacher guides.

Sponsored by local businesses and 

community groups, these programs 

are offered at no charge to schools.

The organization works to teach students 

to understand and appreciate the free 

enterprise system. Financial literacy 

elements are interwoven throughout all 

the courses, in grades K-12. Local offices of 

the organization coordinate programming 

to match each community’s needs, 

reaching approximately 4 million students 

in 145 markets in the United States.

Treasury Department and Midwestern University 

Collaborate to Develop Money-Based Math 

Curriculum

In 2001, the U.S. Department of the 

Treasury, working with a university in the 

Midwest, developed 

Money Math: Lessons 

for Life, a curriculum 

that uses real-world 

personal financial 

scenarios to teach 

mathematical concepts 

and basic finance to 

students in grades seven 

through nine. The 

lessons emphasize the 

application of math in 

savings, taxes, balancing 

budgets and home 

improvement projects. The kit contains 

reproducible activity sheets for students 

and incorporates the use of spreadsheets.

Developed to adhere to national math 

standards allow for easy integration, the 

curriculum is appropriate for any class such 

as family and consumer science or social 

studies, or after school programs designed 

to teach practical financial or math skills 

to students in grades seven through 

nine. For example, learning to calculate 

compound interest and understanding 

its mathematical significance, allows 

students to appreciate the cumulative 

benefits of regular saving. The curriculum 

is available free of charge in electronic 

and hard copy formats at www.publicdebt.

treas.gov/mar/marmoneymath.htm.

Major Financial Publication Brings Business 

and Economic Lessons into High Schools 

through Classroom Edition Newspaper and 

Customized Curriculum

Some teachers integrate financial 

education into their classrooms through 

the use of a student version of a business 

oriented newspaper. This classroom 

newspaper has been in publication for 14 

years and is delivered each month to more 

than 5,000 secondary schools and to an 

estimated audience of 750,000 students.

In addition to the 

monthly student 

newspaper, the 

classroom newspaper 

service includes 

a teacher’s guide 

that contains 

worksheets and 

lesson plans to help 

teachers integrate 

the contents of the 

newspaper into their 

curricula. There are 

additional lessons 

and teaching resources available on their 

Web site. The program also includes a 

single copy of the daily newspaper which 

allows teachers to reinforce economic 

principles in the classroom newspaper 

with day-to-day developments from the 

business world. The monthly student 

newspaper which features specially 
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selected articles from the daily newspaper 

has included topics such as Who Deserves 

Healthcare? and House of Cards: The Risks 

and Rewards of America’s Credit Culture. The 

stories are intended to use the news and 

trends of the business world to convey 

meaningful lessons that students can 

practice everyday — in school, at home, 

and in their communities. The classroom 

newspaper is delivered each month with 

the support of subscribers, sponsors, and 

partners in the public and private sectors.

The Treasury Department White Paper — 

Integrating Financial Education into School 

Curricula

In October of 2002, the Treasury 

Department released a White Paper 

on integration of financial education 

into school curricula, as a result of a 

panel discussion hosted by the Treasury 

Department and the Department of 

Education.

10 The White Paper is available 

at www.treasury.gov/financialeducation.

The panel consisted of key national 

youth education groups, and focused on 

the benefits of incorporating financial 

education into math and reading curricula 

within a standards-based educational system.

The report, entitled Integrating Financial 

Education into School Curricula, identified 

five access points for bringing financial 

education into schools. The access points 

are state standards for education, testing, 

textbooks, financial education materials, 

and teacher training. The White Paper 

can serve as a practical roadmap for policy 

makers, educators, and others interested 

in accomplishing the goal of integrating 

financial education into core math and 

reading curricula. It also includes a list 

of Web-based clearinghouses and other 

organizations that compile lists of financial 

resources that target school-age audiences.

Summary

The starting point for giving people a 

basic understanding of personal finance 

is youth financial education, and the best 

starting place to reach large numbers of 

young people with financial education is 

in schools. Teaching financial education 

in schools starts the process of preparing 

children to become competent consumers 

and managers of household wealth.

While some schools may opt for a standalone class, the inability to provide such 

a class should not prevent a school or 

an educator from exposing students to 

financial topics. Integrating financial 

education concepts as part of other 

subjects, such as math, social studies or 

family and consumer science, offers a 

creative method of arming students with 

lifelong financial skills. Such integration 

not only enhances the teaching of subjects 

such as reading and math, but also makes 

financial education less susceptible to 

elimination due to local school budget 

cuts or changes in course offerings.
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2. Providing Teachers with Training and 

Support to Effectively Teach Financial 

Education Topics

Many teachers are not trained to teach 

financial topics. Financial literacy is not 

something they were taught in college or 

learned through professional development, 

and therefore, they may not feel 

comfortable or confident in their abilities 

to teach it to students. Some teachers may 

also question their 

own personal level 

of financial literacy, 

making it difficult 

for them to instruct 

authoritatively on the 

subject. The result 

is that a teacher may 

fully recognize his or 

her students’ need for 

financial education, 

but simply may not be 

trained to meet it.

By raising the level of 

educators’ knowledge 

and confidence in 

teaching financial 

literacy subjects in a 

range of academic 

settings (including 

public schools, private schools, and 

community-based courses), schools 

can boost the availability of financial 

education to students. Through teacher 

training programs, effective materials 

and resources, and appropriate curricula, 

the financial literacy of educators, and 

the students they teach, can improve.

Through innovative programs in both 

Wisconsin and West Virginia, teachers 

and community educators are improving 

their knowledge of financial literacy 

issues and becoming more confident 

financial education instructors.

Wisconsin Program Instructs Teachers on 

Financial Literacy Topics

A program in the state of Wisconsin 

provides teachers with the training and 

education necessary to become effective 

financial literacy instructors. The program 

provides the materials, curricula, and 

resources to enhance the self-sufficiency 

and financial literacy of educators and 

the thousands of K-12 students they teach.

In partnership with a state 

coalition for financial literacy, 

this program offers a series 

of week-long teacher-training 

courses to educators. These 

classes—held during the 

summer on a college campus 

in Wisconsin—provide 

instruction and resources 

on issues such as personal 

finance, economics, savings 

and investing, insurance, 

credit, and entrepreneurship.

The curriculum is delivered 

by a blend of business and 

academic professionals and 

has created a motivational 

and professional experience 

that equips educators with 

content, materials, and skills 

to teach and promote financial literacy 

in their classrooms and communities.

Personal Finance Training Provided to West 

Virginia Educators

In 2001, a personal finance training 

program began in West Virginia. The 

program helps teachers master financial 

literacy topics by offering free courses 

to state educators and up to three 

hours of graduate, undergraduate or 

professional development credit. Topics 

include credit and credit counseling, 

identity theft, investor education, and 
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a variety of other issues. The training 

program was initiated by a state coalition 

for financial literacy, and represents 

a coalition of state agencies, private 

businesses and educational organizations 

with an interest in personal finance.

Summary

Teachers should seek out and take 

advantage of financial education training 

in their state or region. Schools can also 

partner with local banks, credit unions, 

or other financial institutions to provide 

financial literacy training to teachers.

3. Providing Teachers with Effective 

Financial Literacy Materials, Curricula, 

and Resources

Even given 

the time and 

willingness to 

incorporate 

financial education 

into the school 

environment, 

many teachers 

lack the resources 

and knowledge 

necessary to 

develop and 

successfully teach 

a financial education program to their 

students. Similarly, many parents may not 

feel adequately equipped to successfully 

instruct their children on financial issues.

Many teachers and parents are unaware 

of the wealth of financial education 

information and materials already 

available to them for little or no cost.

An abundance of financial education 

curricula exists to meet the needs 

of virtually all U.S. students. Several 

organizations have established 

clearinghouses of free or low-cost materials 

that can be used by educators and parents 

to teach financial concepts. State and local 

governments, businesses and nonprofit 

can all benefit from such materials they 

seek to implement financial education 

programs in their communities.

To better equip educators with available 

resources, schools can partner with 

organizations that develop, sponsor, 

and deliver financial education 

programs. Public-private and privateprivate partnerships can be successful 

in bringing financial education into 

the classrooms and equipping schools 

with the expertise and resources 

needed to teach valuable concepts.

Educators and families can access the 

financial education information and 

resources available 

in the marketplace 

through efforts 

from a national 

coalition for 

financial literacy 

and through 

a special 

clearinghouse 

for financial 

education.

National Coalition Maintains a Database of 

Financial Education Materials

A coalition for financial literacy seeks to 

help educators and parents, including 

parents of home schooled children, locate 

personal financial education materials.

To accomplish this, the coalition 

established a database of personal finance 

resources available from a variety of 

education providers, such as government, 

business and non-profit organizations. 
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This database is located on the coalition’s 

Web site, and many of the materials are 

low cost or free of charge. Teachers can 

use these personal finance teaching 

materials to support their state’s standards 

in economics, business, math and family 

and consumer science. To ensure that 

disseminated materials adhere to high 

standards, the coalition uses a review 

checklist as a guide in the selection of 

materials to be included in the database.

Foundation Provides Clearinghouse for 

Financial Education Materials 

Educators throughout the nation, 

including parents 

of home schooled 

children, can turn 

to a Web-based 

clearinghouse for 

financial education 

to provide materials 

and curricula on 

a range of issues.

The clearinghouse 

has materials for 

all ages, but has a 

particularly deep 

offering for young 

people, especially those in high school.

The materials provided through the 

clearinghouse are sorted into subject 

areas on a variety of financial topics.

Organizations can access teacher 

guides and classroom materials 

on financial education through 

the clearinghouse Web site.

Summary

Teachers and parents can draw 

on the wealth of free and low-cost 

materials available from the many 

organizations committed to the 

development and implementation 

of financial education curricula.

4. Increasing Financial Literacy by 

Reaching Youth in Non-Traditional 

Educational Venues

Teaching financial literacy is not a task to 

be addressed solely in schools. Non-profit 

organizations, private firms, youth clubs, 

and other youth organizations should be 

active and involved in providing resources 

and education to students throughout the 

nation. To complement what is happening 

in the classroom, involved organizations 

can reach out to 

youth through nontraditional methods 

and venues, offering 

tailored information 

that speaks directly 

to young people.

Through community 

education 

efforts such as 

those available 

through afterschool programs, 

summer camps, 

personal finance clubs, correctional 

facilities, and youth service organizations, 

students are able to gain financial 

literacy skills through a non-school based 

environment. For example, students 

who have dropped out of high school 

are learning financial skills through an 

alternative high school in Arizona.

National Organization for Girls Teaches 

Financial Skills

A national organization for girls that 

teaches leadership, character and a variety 

of practical skills has also been teaching 
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its members about financial literacy. The 

organization has developed a curriculum 

kit to help members ages nine to 11 

increase their financial skills. The projects 

and activities included in the curriculum 

offer opportunities for volunteers to 

help girls learn, and put into action key 

concepts and skills related to personal 

money management.

The program also 

makes effective 

use of corporate 

partnerships to 

help educate their 

members. Working 

with various private 

companies, the 

program leaders 

developed Web sites 

specifically designed 

for young girls.

Through these sites 

the girls learn about financial issues that 

they will face throughout different stages 

of their lives. These sites are tailored for 

and appeal to this particular demographic; 

for example, one site provides a video 

game where girls can pick a character 

and make its financial decisions in 

hopes of reaching established goals.

The site also provides links to financial 

aid and scholarship opportunities.

The program also uses awards and 

badges to encourage financial literacy.

These awards are received after members 

complete various tasks such as coming 

up with marketing campaigns to sell 

products or after completing certain 

exercises on the financial Web sites.

North Carolina Summer Camp Provides 

Financial Training as Essential Life Skill 

In North Carolina, a summer camp 

teaches life skills to boys and girls from 

low-income homes entering the sixth, 

seventh or eighth grades. It is focused 

on combating a variety of problems, 

including a lack of financial education. 

Students who have demonstrated academic 

achievement and advancement over the 

previous school year are chosen from each 

county to participate in the program.  

The camp activities 

focus on preparing 

middle school 

students for the day 

they begin their 

careers through 

classes in such topics 

as entrepreneurship, 

citizenship 

responsibilities, and 

conflict resolution, 

as well as business 

and banking.  The 

students learn 

how to balance a checkbook, prepare a 

budget, make a profit in business, assess 

the value of money, and to manage 

money wisely. Campers also participate 

in traditional camp activities such as 

horseback riding, swimming and hiking.

National Network of After School Youth Centers 

Adopts Financial Education Curriculum 

An after-school youth organization with 

community centers across the country 

has identified financial education as a 

priority for the young people it serves.

This private-private partnership between 

a large discount brokerage house and 

a boys and girls club is committed to 

reaching young people and increasing 

their financial skills. Through their 

joint program, 4 million young people 

have access to additional financial 

education through a national network 

of 3,700 neighborhood-based facilities.
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The organization primarily serves 

disadvantaged youth. In one major city in 

Colorado, for instance, 70 percent of the 

youth come from such households. The 

young people who are part of the financial 

literacy program receive personal financial 

education lessons, and gain new insight on 

issues like budgeting, saving, and investing.

Teens from age 13 to 18 learn practical 

ways to save, spend and invest the money 

they earn. These lessons are taught by 

employees of this brokerage house who 

are given the time to volunteer and share 

their financial expertise with teenage 

club members and their families.

To date, more than 450 clubs have 

adopted the program, with approximately 

36,000 teens expected to complete the 

program over the next two years. The 

club was able to initiate such a broad 

effort quickly because it partnered with 

a national brokerage firm that provided 

the financial education curriculum.

Minnesota Correctional Facility Recognizes 

Importance of Financial Skills 

in Rehabilitating Offenders

One of Minnesota’s state correctional 

facilities is designed to provide treatment, 

education and transition services for 

serious and chronic male juvenile 

offenders. The average age of residents 

is just under 18. The facility’s leadership 

considers deficiencies in financial 

management and related skills as risk 

factors for the youthful offenders being 

admitted to their facility. In response, 

the facility provides residents with the 

opportunity to learn financial and related 

skills in an effort to reduce the rate of 

recidivism. The program’s goal is to 

equip residents to become successful 

members of society. Residents who 

have earned a high school diploma 

or GED participate in a program that 

provides instruction in the areas of 

financial management, independent 

living, and employment retention.

Participants in the facility’s Transition 

Services Program participants scored in 

the top 8 percent nationwide among 

correctional programs studied under the 

Corrections Program Assessment Inventory

(CPAI). CPAI is based on best practices 

and is the recommended assessment 

tool by the U.S. Department of Justice’s 

National Institute of Corrections.

Youth Service Organization

A youth service organization offered by 

the Cooperative Extension System in 

partnership with USDA-CSREES, plays 

an important role in educating youth 

about money. The organization reaches 

7 million young Americans annually, and 

has three national curricula to help young 

people understand the basics of earning 

and managing money so they can develop 

sound financial habits at an early age.

 11

In one of the programs, the youth service 

organization works with students to set 

financial goals, understand credit, and 

learn about financial planning. Another 

program helps youth become informed 

and responsible consumers in today’s 

dynamic marketplace. A third program 

is an entrepreneurship effort focused on 

the knowledge, skills, and mindsets youth 

need to meet the pending challenges of 

work and community in the 21st century.

Alternative High School in Arizona Stresses 

Financial Knowledge for Students

Recent high school dropouts are 

learning about financial skills through 

a collaborative effort. Established 

through a partnership between the local 
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school district and two foundations, 

this alternative public high school 

is designed to help those students 

(ages 17-21) who have dropped out 

of high school and who wish to earn 

a full diploma instead of a GED.

The students receive financial education 

training, obtain work experience, 

and participate in community service 

activities. They also learn through 

career development activities such as job 

shadowing, guest speakers, and workplace 

and college tours. The school offers its 

computer-based instruction through 

flexible, student-determined hours, while 

providing 

student 

counseling 

through a 

Career Resource 

Coordinator.

The financial 

education 

curriculum 

and instruction 

is provided 

by the local 

credit union.

Summary

Through nonprofit organizations, private 

firms, youth clubs, and other youth 

organizations, students can receive muchneeded financial literacy instruction.

Designed to complement any financial 

instruction occurring in the schools, 

community-based education can reach out 

to youth through non-traditional methods.

Others wishing to give students financial 

skills outside of the classroom can follow 

the example of the referenced programs 

and make use of non-traditional venues 

to reach youth on this important topic.

5. Increasing the Financial Skills of 

Postsecondary Students 

According to the Department of 

Education’s National Center for 

Education Statistics, among 9,000 

students surveyed from 800 postsecondary 

institutions, approximately 3,300 

did not successfully complete the 

program in which they were enrolled.

12 

Nationally, 14 percent of students 

who left college without completing a 

degree cited financial reasons, while 

only 2 percent cited academic ones.

For these students who are facing financial 

difficulties, both in college and following, 

financial literacy 

skills can be a 

useful tool in 

navigating personal 

economic issues 

and succeeding 

in one’s goals.

These skills can be 

gained through 

financial education 

efforts offered 

through colleges, 

universities, lenders, 

and non-profit 

organizations.

The higher education institutions 

described below are providing financial 

literacy opportunities to students.

Florida Community College Teaches Personal 

Finance Topics

Under the guidance of faculty members 

from the School of Business and English 

as a Second Language Department, 

instructors from the college’s five campuses 

have incorporated the financial education 

curriculum into their learning objectives.
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Through a partnership with a large 

financial institution, the FDIC Money Smart

curriculum is being delivered to students.

Sessions are facilitated by students from 

business classes or by students in campus 

business organizations with a banking 

representative on hand to address specific 

bank product and service related questions.

The classes are open to the public, 

but primarily are marketed to the 

college’s students. The college trained 

380 participants in 2004 and over 

1,000 students during the Spring 2005 

semester. In 2005-2006, the college 

plans to expand the program and 

add a computer-based instruction 

option to reach even more students 

and community members.

University in Rhode Island Provides Incoming 

Students with Money Management Tools

At one Rhode Island university, incoming 

freshmen enroll in an online credit 

education course as part of freshman 

orientation. The program serves as a 

tutorial, providing an introduction to 

money management and credit use. This 

five-section program uses tailored materials 

such as worksheets to reinforce the 

concepts presented during each module.

Interested students can also enroll in a 

certificate program in Family Financial 

Counseling and Planning (FFCP) through 

the university’s Department of Human 

Development and Family Studies. FFCP 

certificate holders can then use their 

financial literacy skills to find careers in 

personal financial counseling or planning 

on behalf of community organizations 

that serve families and children.

Summary

The years immediately following high 

school offer significant financial milestones 

for many. Successfully managing tuition 

and student loan needs, a first credit 

card, or a first apartment lease requires 

strong financial skills and access to 

the right information. To better equip 

postsecondary students with the money 

skills they need, colleges, universities, 

lenders, and non-profit organizations can 

play a crucial role in making financial 

education available to young people.
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Calls to Action

Tactics Employed: Partnerships, Integration/Teachable 

Moments, Quality Materials

10-1 In 2006, the Treasury Department will partner with the U.S. Department of Education 

to host a summit focused on integration of financial education into the core school 

curriculum. The group also will survey promising practices in financial education 

and in teacher-training in an effort to assist others who are starting or enhancing 

programs. This public meeting will bring together policymakers, educators, and 

other leaders in the fields of general education and financial literacy. Findings 

from this summit will be made available to educators and policymakers throughout 

the nation.

10-2 Teachers, parents, and youth organizations should make greater use of the wealth 

of free and low-cost materials available on a variety of financial education topics 

through national clearing houses.

10-3 Postsecondary institutions should consider ways to raise the financial literacy levels 

of their students to help them avoid financial hardship due to mismanagement of 

credit and money.

Endnotes

1 Greenspan, Alan (2005, April 8). The Federal Reserve System’s fourth annual community affairs research 

conference, Washington, DC: The Federal Reserve Board.

2 The National Council on Economic Education. (2005, March). The standards in economics survey: 

What American teens & adults know about economics. New York, NY.

3 Jump$tart Coalition® for Personal Financial Literacy. (2004). 2004 personal financial survey of high 

school seniors. Washington, D.C.

4 Ibid.

5 Ibid.

6 Ibid.

7 Ibid.

8 Ibid.

9 National Center for Education Statistics. (2002, November). Short-term enrollment in postsecondary 

education: Student background and institutional differences in reasons for early departure, 1996–98 (NCES 

2003–153). Washington, DC: U.S. Department of Education, Office of Educational Research and 

Improvement. Retrieved August 4, 2005, from: nces.ed.gov/pubs2003/2003153.pdf.

10 U.S. Department of the Treasury, Office of Financial Education. (October 2002). Integrating financial 

education into school curricula: Giving America’s youth the educational foundation for making effective 

financial decisions throughout their lives by teaching financial concepts as part of math and reading curricula in 

elementary, middle, and high schools (White Paper). Washington, DC.
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11 Data from U.S. Department of Agriculture, Cooperative State Research, Education, and Extension 

Service.

12 U.S. Department of Education, National Center for Education Statistics. (2001) Beginning 

postsecondary students longitudinal study. Washington, D.C.
97

Chapter 11

Academic Research and Program Evaluation

Overview

Research has shown that many Americans 

lack knowledge of the basic personal 

economics they need to make informed 

financial judgments and manage 

their money effectively.

1

 Across all 

demographic and age groups, Americans 

lack sufficient knowledge of personal 

finance issues. Research has affirmed 

this conclusion, and it is on this basis 

that greater attention is now being paid 

to promoting and expanding financial 

literacy efforts. Since the mid-1990s, many 

organizations have initiated financial 

literacy programs in response to this 

issue.

2

 In fact, a recent study of financial 

literacy programs found that 65 percent 

of surveyed programs began in the 

1990s, and almost 75 percent surveyed 

began in the late 1990s or early 2000.

3

 

Since many financial literacy programs 

are relatively new, a common, systematic 

approach to developing and delivering 

financial education is still lacking. As 

schools, employers, community-based 

organizations, and Federal, state, and 

local, governments all work to help 

Americans achieve financial literacy, more 

research and program evaluation needs 

to be conducted so that organizations 

are able to validate or improve their 

efforts and measure the impact of their 

work on financial literacy levels.
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Successful programs use testing, surveys, 

or other objective evaluation measures 

to prove their worth by demonstrating 

a positive impact on participants’ 

attitudes, knowledge, or behavior, with 

formal program evaluation determining 

quality, effectiveness, or value. As 

individual financial education programs 

are deemed successful, these will help 

establish specific program goals and 

performance measures to track the 

progress and success of other programs, 

serving as models for future efforts.

Challenges 

To properly evaluate financial literacy 

programs and move successful models 

into increased practice throughout the 

United States, financial education leaders 

can turn to both academic research and 

programs to help identify best practices.

Issues in Academic Research 

and Program Evaluation

1. Encouraging Academic Research

Research on the effectiveness of 

financial literacy programs has been 

conducted in a variety of areas, including 

credit, homeownership, savings, and 

retirement savings. Additionally, some 

studies have focused on the setting in 

which financial education has been 

provided, such as in the workplace or 

as part of high school curricula.

Samples of academic research conducted 

in the area of financial literacy and 

education include studies by the Credit 

Research Center at Georgetown University, 

the Pension Research Council at the 

Wharton School of the University of 

Pennsylvania, and the Center for Social 

Development at Washington University 

in St. Louis. Other areas of academic 

research include financial education in 

the workplace and in school curricula.

Credit Research Center at Georgetown University

Research conducted by the Credit 

Research Center at Georgetown University 

compared the usage of credit cards by 

three different groups — those opened 

by young adults through college student 

marketing programs; those opened 

through conventional marketing channels 

by young adults (aged 18-24); and those 

opened through conventional channels 

by older adults.

4

 They found that studentmarketed accounts had smaller balances, 

lower credit limits, and lower utilization 

rates than accounts opened by other 

groups. They also found that while studentmarketed accounts were more likely to be 

delinquent and have a higher likelihood 

of charge-off, both the delinquency and 

charge-off rates of the student-marketed 

accounts and conventional accounts of 

young adults converged within 24 months.

The findings are consistent with credit 

card issuers’ statements that they establish 

student accounts with relatively low 

credit limits, expecting that the large 

majority of new, young cardholders 

will learn how to manage a credit card, 

establish strong credit histories, and 

become longer-term credit customers.

Pension Research Council

Research at the Wharton School of the 

University of Pennsylvania examined 

a series of issues related to financial 

education using an annual survey of 

households conducted by a financial 

management and advisory company.

5

 This 

research found that households fail to fully 
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appreciate their financial vulnerabilities 

and do not posses adequate decisionmaking skills when it comes to financial 

matters. In light of this evidence, the 

research examines financial education 

programs offered through the workplace 

and focuses on the effects of these 

programs on household behaviors.

The study found that financial education 

in the workplace increases both the 

participation in private pension plans 

and the level of contributions to those 

plans. Thus, the study concludes that 

any improvements to financial education 

programs in the workplace would 

go a long way toward encouraging 

greater retirement savings.

Center for Social Development at Washington 

University in St. Louis

Studies from the Center for Social 

Development at Washington University 

in St. Louis have examined data from 

participants in the American Dream Policy 

Demonstration, a national demonstration 

of Individual Development Accounts 

(IDA).

6

 The key difference between IDAs 

and other subsidized savings programs 

is that IDAs require financial education, 

and thus the population of participants 

is particularly of interest in the financial 

literacy arena. These studies from the 

Center for Social Development, the first 

quantitative look at the effects of financial 

education on savings in IDAs, found that 

12 hours of general financial education 

increases savings, although the effects may 

diminish or reverse as hours increase.

Although the implications from 

these studies may only be drawn for 

participants in the American Dream Policy 

Demonstrations, the findings suggest that 

financial education has significant effects 

on savings behaviors, and that the courses 

do not need to be long to realize these 

positive effects. Moreover, the findings 

suggest that targeted, culturally-relevant 

marketing messages help convince people 

to attend financial education classes and 

to consider these classes to be worthwhile.

Financial Education in the Workplace

A number of studies have examined 

financial education in the workplace.

Research conducted at Iowa State 

University examined the link between 

financial education in the workplace 

and workplace satisfaction.

7

 Using data 

from a national sample of employees 

of an insurance company, the study 

found that employees who participate 

in workplace financial education more 

fully understand personal finances and 

recognize how financial literacy impacts 

their financial futures. Moreover, the study 

found that employees gain confidence in 

financial matters and their future financial 

situation through workplace education, 

and are more likely to be satisfied with 

and supportive of their company.
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In addition, research conducted by 

the College of Management at North 

Carolina State University examined 

whether financial education programs 

effectively alter retirement savings goals 

and choices, such as contribution rates, 

income needs in retirement, and selection 

of retirement options in the pension 

plan.

8

 Using data from three surveys 

of participants in a financial education 

seminar, they found that participation in 

the seminar increased contributions to 

pension plans and that many participants 

re-evaluated their expected retirement age 

and retirement income goals. However, 

the study also found that there was a 

substantial disconnect between the stated 

intention to change saving behavior and 

the actual actions taken by participants.

For example, over one-third of participants 

reported that they simply failed to take 

the necessary steps to increase their 

retirement savings, despite the stated 

desire to do so after the program. 

Research conducted for the National 

Bureau of Economic Research also 

examined the effects of financial education 

in the workplace.

9

 Using a survey of 

households, this study looked at the effects 

of financial education programs offered 

in the workplace on general saving and 

on retirement saving. This research found 

that a significant number of employees 

rely heavily on financial education in the 

workplace, and that workplace financial 

education replaced other potentially 

authoritative sources, such as financial 

planners, and displaced other sources, 

such as parents and friends. The study 

also found that financial education in 

the workplace increased the rates of 

general saving and retirement saving.

Financial Education in School Curricula

Studies of financial education have also 

focused on its effects on students when 

financial education is taught through 

school curricula.

10 For instance, research 

from the National Bureau of Economic 

Research examined the long-term effects 

of high school curriculum mandates on 

adult decisions regarding savings. Using a 

survey of American households, the study 

found that state mandates that require 

high school students to receive instruction 

on topics related to household financial 

decisions (such as budgeting, credit 

management, savings, and investments) 

significantly increased asset accumulation 

once the students reached adulthood.

These effects on asset accumulation were 

gradual over time rather than immediate.

Summary

Academic research on financial education 

and its effects on personal behavior is 

necessary to assist policy makers and program 

developers in the design and implementation 

of financial education programs. 

2. Program Evaluation Utilizing Proven 

Quantitative Analysis

As financial literacy programs are 

implemented in communities throughout 

the nation, specific emphasis should be 

placed on making certain that materials 

and curricula are proven to be effective 

in improving financial literacy skills. By 

scientifically reviewing past performance 

and achievements, financial literacy 

providers can establish a clear sense of 

programmatic best practices and successes.
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To effectively assess financial literacy 

programs, evaluators should ensure 

that: 1) materials are tested before 

publication under conditions that 

realistically replicate the target settings 

and audiences; 2) feedback from teachers 

and learners is collected and used to shape 

development and revision of materials; 

3) materials include assessment tools, 

such as pre- and post-tests, and examples 

of acceptable work, where appropriate; 

and 4) assessment tools measure both 

student knowledge and behavioral change 

as a result of teaching and learning.

Both nonprofit and Federal sectors have 

evaluated their programs using quantitative 

methods. Organizations that developed 

such programs as a financial planning 

program for high school students, K-12 

personal finance curriculum, and Money 

Smart have used empirical studies to 

evaluate the quality and delivery of their 

financial literacy education efforts.

Money Management Program Increases High 

School Students’ Knowledge 

Research demonstrates that high school 

students enrolled in a national nonprofit 

foundation’s financial planning program 

are more skilled and confident with 

financial literacy issues. By conducting an 

extensive study of program participants, 

the foundation was able to empirically 

determine that high school students 

enrolled in the financial planning 

program nationwide know more about 

managing money and have begun using 

money management skills that will be 

with them for a lifetime. The financial 

planning program is offered in partnership 

with the and participating Land Grant 

University Cooperative Extension Services 

and associations of credit unions.

Available at no cost to all U.S. high 

schools, the financial planning program 

uses contemporary materials to teach 

the basics of personal finance to young 

people while developing life-long habits 

and attitudes about money. The study 

found that as a result of participation in 

the program, 60 percent of participants 

had changed their saving patterns. Of 

those who reported having changed their 

saving habits, 80 percent said they now 

save for what they really need or want and 

20 percent indicated that they now save 

every time they receive money. Comparing 

financial knowledge and behaviors 

after participating in the curriculum 

to levels before the program began, 

38 percent of students had improved 

skills for tracking spending, 61 percent 

knew more about the cost of credit, 58 

percent improved their knowledge about 

investments, and 44 percent felt more 

confident about managing their money.

Students were surveyed before they studied 

the curriculum material, immediately 

after they completed the classes, and, 

again, three months after completion. 

Immediately after studying curriculum 

material, there was a statistically significant 

increase on all financial knowledge, 

behavior, and confidence questions. 

Three months after completion, students 

had statistical increases on all but one 

question.  The nationwide, 18-month 

evaluation project was conducted by 

Minnesota Cooperative Extension in 

partnership with USDA CSREES.

Non-profit Documents Gains in Students’ 

Financial Aptitude after Completion of Class

A personal finance curriculum developed 

by a non-profit organization focused 

on teaching young children about the 
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free enterprise system. Detailed studies 

of the impact of this sequential and 

integrated program have spotlighted 

the organization’s ability to improve 

financial skills among K-12 students.

Students address business, economics, 

and finance issues by using information, 

applying basic skills, thinking critically, 

and solving complex problems. In studies 

of these programs by external evaluators, 

these students demonstrated a significant 

understanding of economics and business 

knowledge and an enhanced desire to stay 

in school and pursue a career in business.

Quantitative research on this personal 

finance curriculum demonstrated 

high levels of student interest in and 

understanding of financial issues and 

strong support from teachers and 

volunteers. Students not only made gains 

in their understanding of economic 

and business concepts, but they were 

able to use this understanding to make 

financially responsible decisions.

Overall the study found that students who 

had previously participated in the program 

had significantly more knowledge prior 

to beginning the program than students 

who had not previously participated.

Money Smart

The FDIC and a national nonprofit 

housing organization have partnered 

to conduct a survey of Money Smart

students and the impact Money Smart

has on participants’ lives. In particular, 

the survey is attempting to determine 

if participants develop banking 

relationships, such as opening checking 

or savings accounts, obtaining loans or 

using other bank services, as a result 

of applying information learned from 

the Money Smart training. FDIC will 

survey students who have participated 

in Money Smart classes — specifically 

those classes focusing on basic banking, 

budgeting and financial management, 

and credit, including understanding the 

importance of a good credit report. 

The survey will consist of conducting 

two questionnaires that Money Smart

students complete and then a follow-up 

telephone interview six to twelve months 

after students complete their Money Smart

training.  The goal of the survey is to 

determine the extent to which Money Smart

financial education training is effective in 

helping participants change their behavior 

to improve their money management skills. 

Summary

A broad and deep base of research on 

financial education will assist policymakers 

and public and private sector providers 

of financial education in their work on 

financial literacy. While research has 

been conducted on financial literacy, 

some questions remain unanswered.

Additionally, some practitioners of 

financial education may not be aware 

of the latest research on this subject.

3. Program Evaluation Utilizing 

Qualitative Evaluation

To supplement the quantitative research 

that highlights successful financial 

literacy efforts, educators, state and local 

governments, nonprofit organizations, 

and employers can also use qualitative 

measures to gauge the success of 

financial education programs.

To ensure that Americans have access to 

financial education programs that can 

assist them in obtaining the practical 

knowledge and skills necessary to make 
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informed financial choices throughout 

their lives, the Treasury Department’s 

Office of Financial Education (OFE) has 

published a list of eight elements of a 

successful financial education program.

These eight indicators relate to program 

content, delivery, impact, and sustainability.

Viewed collectively, the eight indicators 

serve as a guide for developing new 

programs or enhancing existing program 

strategies for achieving the greatest impact.

Indicator One: Focus on Basic Tenets

A successful financial education 

program should focus on one or more 

of the four basic tenets of financial 

empowerment — basic savings, credit 

management, home ownership, and 

retirement planning. While there are other 

worthwhile financial education topics, 

these four areas are the basic building 

blocks to achieving financial security.

Indicator Two: Tailored to Target Audience

A successful financial education program 

should be tailored to its target audience, 

taking into account the audience’s 

language, culture, age, and experience.

Cultural biases, language differences, 

and other related factors play an 

important role in the development 

of any educational program.

Indicator Three: Local Distribution

A successful financial education program 

has the most profound impact when it 

is delivered through a local distribution 

channel that makes effective use of 

community resources and contacts.

Partnerships with local organizations that 

are already ingrained in the community 

are one of the most effective means 

of garnering support and acceptance 

within a community and will result in 

more efficient delivery of information.

Indicator Four: Participant Follow Up

A successful financial education program 

follows up with participants to reinforce 

the message and ensures that participants 

are able to apply the skills taught. These 

actions serve to further break down 

those barriers and pave the road to 

better access to financial services.

Indicator Five: Specific Program Goals

A successful financial education program 

establishes specific program goals and 

uses performance measures to track 

progress toward meeting those goals.

To achieve goals, an organization 

must first set goals. It is important that 

financial education providers set a 

standard of excellence and track progress 

toward achieving their missions.

Indicator Six: Demonstrable Impact

A successful financial education program 

can prove its worth by demonstrating a 

positive impact on participants’ attitudes, 

knowledge, or behavior through testing, 

surveying, and other objective evaluation.

Programmatic success — both for the 

individual and the community — can be 

measured, for instance, by determining 

if participants increased savings, opened 

bank accounts, saved for a home, or 

qualified for a mortgage at higher 

rates than nonprogram participants.

Indicator Seven: Replicability

A successful financial education program 

can be easily replicated on a local, 
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regional, or national basis so as to have 

broad impact and sustainability.

Indicator Eight: Built to Last

A successful financial education program 

is built to last as evidenced by factors 

such as continuing financial support, 

legislative backing, or integration into an 

established course of instruction. This 

element simply recognizes that good 

programs must have the ability to survive 

if they are to have a strong impact.

In practice, these indicators have been put 

to use to recognize programs, such as those 

honored with the John Sherman Award for 

Excellence in Financial Education, that are 

making a difference in financial literacy.

John Sherman Award for Excellence 

in Financial Education

Through its John Sherman Award, the 

Treasury Department honors programs 

that embody the qualitative achievements 

identified in its Eight Indicators. The 

award is named for John Sherman, the 

32nd Secretary of the Treasury who served 

from 1877 to 1881 in the administration of 

President Rutherford B. Hayes. Established 

by the Treasury Department’s OFE, the 

John Sherman Award for Excellence 

in Financial Education recognizes 

organizations around the country with 

exemplary financial education programs.

By raising public awareness of effective 

financial education practices, the John 

Sherman Award serves two purposes. First, 

it honors successful programs, which helps 

increase participation by individuals in the 

community and also raises the program’s 

stature in ways which may help with 

fundraising. Second, it provides others 

with model programs to assist with the 

development of initiatives in communities 

that need financial literacy assistance.

The award’s Web site, which includes a 

list of past recipients, is located at www.

treas.gov/offices/domestic-finance/

financial-institution/fin-education/.

Summary

Effective programs possess similar 

characteristics. Successful programs not 

only produce positive statistical results, 

but also embody qualities that reflect 

program focus, focus on intended 

audiences, and a commitment to public 

outreach. Such programs also set specific 

goals and demonstrate replicable 

results. The eight specific indicators 

developed by the Treasury Department 

are resources that can help key decision 

makers determine the effectiveness of the 

financial literacy methods they are using.
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Endnotes

1 The Government Accountability Office. (2004, November). The Federal government’s role in improving 

financial literacy (Report GAO-05-93-SP). Washington, DC.

2 Vitt, L.A., et al. (2003). Personal finance and the rush to competence: Financial literacy education in the 

U.S: A national field study commissioned and supported by the Fannie Mae Foundation. Middleburg, VA: 

Institute for Socio-Financial Studies.

3 Ibid.

4 Barron, J.M., & Staten, M.E. (2004). Usage of credit cards received through college studentmarketing programs. NASFAA Journal of Student Financial Aid, 34(3). 

5 Bernheim, B.D. (1996). Financial literacy, education, and retirement savings. University of Pennsylvania: 

Pension Research Council. 

6 Clancy, N., Grinstein-Weiss, M., & Schreiner M. (2001). Financial education and savings outcomes in 

Individual Development Accounts. Washington University in St. Louis: Center for Social Development. 

7 Hira, T.K. (2005). Understanding the impact of employer-provided financial education on 

workplace satisfaction. Journal of Consumer Affairs, 39(1).

8 Clark, R.L., & d-Ambrosia, M.B. (2003). Ignorance is not bliss: The importance of financial education. 

North Carolina State University and TIAA-CREF Institute. 

9 Bernheim, B.D., & Garrett, D.M. (1996). The determinants and consequences of financial education in 

the workplace: Evidence from a survey of households. Cambridge, MA: National Bureau of Economic 

Research.

10 Bernheim, B.D., Garrett, D.M., & Maki, D.M. (1997). Education and savings: The long-term effects of high 

school financial curriculum mandates. Cambridge, MA: National Bureau of Economic Research.

Call to Action

Tactics Employed: Public Awareness, Quality Materials

11-1 The Treasury Department along with the Department of Agriculture Cooperative 

State Research, Education, and Extension Service, will convene a symposium of 

researchers who specialize in financial education between the third quarter of 2006 

and the third quarter of 2007. The goal of the symposium is to raise awareness of 

existing academic research and to define questions that require additional analysis.

The symposium will result in a White Paper that will survey current financial 

education research and will also identify areas of potential future research.
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Chapter 12

Coordination Efforts

Overview

Fulfilling its mission under section 114 

of Title V of the FACT Act, the Treasury 

Department, with significant input 

from the Commission, has worked to 

analyze existing financial education 

resources, particularly publications 

and programs, in an effort to “identify 

areas of overlap and duplication among 

Federal financial literacy and education 

programs, and develop a plan to improve 

the coordination of such activities.”

To lead the Commission in its duties, the 

Treasury Department’s Office of Financial 

Education (OFE) was designated by 

Congress to lend its expertise and provide 

primary support to the Commission.

OFE was established in May 2002 as part 

of the Treasury Department’s long-term 

commitment to ensure that all Americans 

have access to financial education 

programs that will help them make 

informed financial decisions throughout 

their lives. As part of the commitment, the 

OFE has assumed primary responsibility 

on Commission initiatives, specifically 

in regards to My Money resources 

and other areas of coordination.
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Issues in Coordination

1. Coordination of Federal Information 

on Financial Literacy 

Each year, Federal agencies develop 

information and education materials 

on consumer finance and consumer 

protection issues. Much of this 

information is now made available 

through the World Wide Web, as 

Americans turn to Federal agencies’ 

Web sites for immediate and dependable 

information on issues of concern.

To ensure that consumers 

are provided one central 

location for all up-todate information on 

financial literacy, the 

Commission launched 

its My Money campaign.

Through this effort, 

the Commission established a Web 

site, MyMoney.gov to serve as a central 

clearinghouse for all Federal financial 

literacy information and resources, and a 

toll-free hotline, 1-888-MyMoney, where 

citizens can obtain a free My Money 

Tool Kit of useful Federal publications.

My Money

Providing consumers with one-stop 

shopping for financial information, the 

Commission established the MyMoney.gov 

Web site, a central repository for all Federal 

financial and consumer education materials.

Through MyMoney.gov, Americans 

are better equipped with important 

information on how to better manage 

their money, and thus improve their lives.

The Web site provides information 

on key consumer topics, including 

budgeting and taxes; credit; financial 

planning; homeownership; privacy, 

fraud, and scams; responding to life 

events; retirement planning; saving and 

investing; and starting a small business.

Through the online site, consumers can 

request the My Money Tool Kit, which 

provides information on personal financial 

management issues such as investing, 

managing credit wisely, planning for 

retirement, and understanding Social 

Security benefits. The tool kit also 

provides citizen access to a wider variety 

of personal financial information through 

the Consumer Information Catalog.

The quarterly Catalog, produced by the 

GSA Federal Citizen Information Center 

(FCIC), lists more than 200 of 

the most popular and helpful 

publications produced by 

more than 40 Federal agencies, 

including Commission members.

The MyMoney.gov Web site 

was established through the 

Commission’s Web Site Subcommittee.

The site is hosted by the FCIC.

Members of the subcommittee included 

representatives from the FRB, NCUA, 

and SEC, Department of Education, 

USDA, DoD, HHS and HUD, DOL, 

Treasury Department, VA, FTC, 

GSA, SBA, SSA, CFTC, and OPM.

In addition to the MyMoney.gov Web site, 

Americans can also call the 

1-888-MyMoney hotline to order a free 

tool kit of useful Federal publications 

that will help them build financial 

literacy. Operators take orders in English 

and Spanish for tool kit publications.

Many of the publications offered as 

part of the tool kit are available in 

English and Spanish and all My Money

resources are available free of charge.

To help develop the hotline, the 

Commission established a hotline 

subcommittee, comprised of 

representatives from the OTS, FDIC, 
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NCUA, HHS, Treasury Department, and 

GSA. The hotline operation is part of 

the GSA’s National Contact Center.

Summary

To ensure that all consumers are able to 

receive accurate, up-to-date, and easyto-find information and resources on 

financial skills, the Commission launched 

its My Money initiative. Through increased 

public awareness of the resources available 

through My Money, including a national 

public service announcement campaign, 

the Commission can provide Americans 

access to valuable Federal financial literacy 

programs, materials, and information.

2. Assessing Federal Resources and 

Avoiding Duplication and Redundancy

It is important for Federal agencies 

to ensure that available resources 

are effective, current and avoid 

redundancy and overlap.

American taxpayers deserve Federal 

financial literacy resources that are 

effective. To make sure the taxpayers 

have access to effective resources, the 

Commission tasked all of its members 

with evaluating their own financial 

literacy resources to determine their 

effectiveness. The Commission collected 

the agencies’ self-reported evaluation data 

and presented the data in the Strategy 

for Assuring Financial Empowerment 

(SAFE Strategy) which will be updated and 

submitted to Congress annually. Each 

agency deemed its programs and resources 

to be effective and worthy of continuance.

The Commission reviewed Federal 

financial literacy and education programs 

and resources to identify possible 

overlap and duplication. After reviewing 

these programs and resources, the 

Commission found that some appeared 

to be the same on the surface. However, 

upon closer inspection, it became 

clear that the resources had important 

differences. The differences might 

have been in the target audience, the 

delivery platform or specific content.

For example, although there is an apparent 

overlap between the DOL’s Web-based 

publication, Preparation for Retirement, and 

the SSA’s Step by Step Retirement Planner, 

the two resources offer very different 

information. DOL’s publication includes 

information on employer-provided 

pensions, profit-sharing plans, and taxsheltered savings plans. In contrast, the SSA 

resource provides detailed information on 

Social Security benefits and requirements.

In many cases, two resources might 

have shared a small amount of similar 

information, because the information 

in each resource was prerequisite to 

discussing the main topic of the resource 

which was vastly different in each 

resource. In these instances the same 

basic concepts were communicated so that 

the consumer could better understand 

the different, more advanced concepts 

that followed. For instance, the FRB’s 

publication, How to Establish, Use, and Protect 

Your Credit, provides similar information 

to that of multiple FTC Internet and 

print publications (i.e., Credit Repair, 

Building a Better Credit Record, How to 

Dispute Credit Report Errors, and ID Theft).

The main difference between these two 

agencies’ materials is that the FTC’s are 

more detailed than those of the FRB.

Finally, some resources may address 

the same topic but target different 

audiences. In these resources, the same 

concepts may be presented in greater 

or lesser specificity, depending upon 

the audience and its level of financial 

sophistication. For example, DOL’s Savings 
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Fitness and the SEC’s Tips for Teaching 

Students about Savings provide general 

information about how to start saving.

The SEC’s online publication, however, 

targets teachers while DOL’s publication 

is an overview for all Americans.

When considering how to reduce apparent 

duplication in various publications it is 

important not to lose the benefits that 

come from customizing a resource to 

its intended audience. Moreover, it is 

also important to avoid fragmenting the 

information so that consumers would 

have to search for and consult several 

documents for a complete answer to their 

financial questions on a particular topic.

After a review of Federal financial literacy 

materials, the Commission concluded 

that, to the degree overlap existed, it 

was both minimal and necessary. 

The Commission is working with all of its 

members to ensure that Federal agencies 

work together and avoid “recreating 

the wheel” when it comes to producing 

financial literacy materials. In this way, 

the Federal government can get the 

most effective use from financial literacy 

resources by utilizing existing programs 

and publications, rather than expending 

additional funds to create new resources.

For example, several Commission members 

create valuable programs and publications, 

affording other Commission members the 

ability to utilize these tools without creating 

their own new resources. This can be seen 

by looking at various examples such as the 

partnership with the DOL, the IRS and 

the SBA and the Money Smart program 

resources provided by the FDIC. By doing 

this, Commission members work together 

to avoid duplication and redundancy.

U.S. Department of Labor, Internal Revenue 

Service and the Small Business Administration

The DOL works in partnership with 

the IRS to develop publications 

regarding retirement plans that the SBA 

disseminates to various small business 

owners and employees. The DOL and 

IRS create publications about various 

types of retirement plans pertaining 

to small businesses, such as Simplified 

Employee Pension Plans (SEP), and Savings 

Incentive Match Plans for Employees 

(SIMPLE). Rather than recreating 

existing publications or developing new 

resources that highlight these types of 

retirement plans, the SBA utilizes the 

DOL’s and IRS’s existing resources 

and sends these publications out to 

small businesses seeking information 

on these types of retirement plans. 

The Federal Deposit Insurance Corporation 

Money Smart Program 

The FDIC’s Money Smart program is 

another example of a Federal government 

program that reduces redundancy among 

Federal financial literacy resources. Rather 

than creating a similar program and 

developing similar teaching curricula, 

numerous Federal agencies including 

eight Commission members utilize the 

FDIC’s Money Smart program. Specifically, 

DOL opted to utilize the Money Smart

program at One Stop Career Centers 

established under the Workforce 

Investment Act. One Stop Career Centers 

offer Money Smart in coordination with 

programs targeted to populations that 

may be outside the financial mainstream, 

such as welfare-to-work participants, 

individuals with no access to mainstream 

financial service providers, public 
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housing residents, immigrants and lowincome homebuyers. There are One Stop 

Career Centers all across the country 

that use the Money Smart program.

Summary

The Commission will continually assess 

the Federal government financial 

education resources, and will make 

recommendations as to which programs 

and publications should be enhanced, 

updated, or discontinued. In addition, 

the Commission will encourage its 

members to utilize existing resources, 

rather than create their own.

Calls to Action

Tactic Employed: Public Awareness 

12-1 The Financial Literacy and Education Commission will continue to enhance 

the Web site MyMoney.gov to make it more comprehensive and interactive. The 

Commission will also work with other organizations to promote the awareness and 

use of the Web site.

12-2 Every six months the GSA and the Treasury Department will partner to survey Federal 

financial literacy and education programs and resources to identify potential 

overlap and duplication. The results of this survey will be put in report form and 

will be submitted to Commission members, with the first report to be issued in 

September 2006.
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Chapter 13

International Perspective

Overview

Since financial literacy impacts the global 

economy, concern for financial literacy 

expands beyond our shores. Just as in the 

United States, other nations with consumer 

markets seek to educate their citizens on 

issues such as credit, money management, 

and investment. Educators and financial 

planners in the United Kingdom, Australia, 

New Zealand, Japan, and other countries 

are dealing with issues parallel to those 

faced in the United States. In Australia 

for instance, a recent survey of adults 

suggested that workers could benefit from 

education about retirement planning.

1

Countries with emerging consumer 

markets also are concentrating on the 

need to educate consumers on financial 

issues. As part of ongoing efforts to 

grow free market economies, emerging 

nations are focusing ongoing efforts 

to include financial literacy as part of 

their overall economic development 

strategies. Although not every 

international effort to increase financial 

education is mentioned, below are 

several valuable initiatives that highlight 

some of the great efforts to improve 

financial literacy around the globe.

Challenges 

In the United States, those involved 

in financial education struggle with 
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generating public awareness of the 

need for financial education and 

getting the right information to the 

right people at the right time. It is 

instructive to note that other nations 

are confronting the same issues. More 

valuable still is observing the ways other 

countries address these issues and which 

practices are proving most successful.

Issues in International Perspective

 1. Approaches Within Other Nations and 

Cross-Border Efforts

Nations and regions are changing 

demographically each day. Increased 

diversity means new populations that 

require tailored communications and 

education. Countries are beginning to 

recognize this, and increasingly they 

see the need for all individuals in their 

populations to be better informed on 

financial matters. With this recognition, 

though, comes the reality that there 

are few available mechanisms to share 

lessons learned and to enact systematic 

improvements for educating and 

informing the public on financial issues.

Several nations appear to be developing 

parallel efforts to establish national level 

initiatives to improve financial literacy.

Dialogue between the organizations 

responsible for these initiatives can 

validate activities and expand the range 

of best practices. By learning from 

similar countries and using international 

organizations to find solutions to common 

problems, organizations such as the 

Organization for Economic Co-operation 

and Development (OECD), International 

Organization of Securities Commissions 

(IOSCO), Counsel of Securities Regulators 

of the Americas (CSRA), an international 

securities association United Kingdom’s 

financial services regulator, Japan’s 

Central Council for Financial Services 

Information (the Central Council) and 

the Australian Securities and Investments 

Commission (ASIC) are identifying ways 

to enhance financial literacy efforts.

Organization for Economic Co-operation and 

Development

The OECD is comprised of 30 member 

countries with a commitment to 

democratic government and a marketbased economy. The OECD has active 

relationships with some 70 other 

countries and other non-governmental 

organizations and is well known for 

its publications and its statistics. Its work 

spans economic and social issues including 

macroeconomics, trade, education, 

development, and science/innovation.

In late 2005, OECD released a report 

entitled Thirty Principles and Good Practices 

for Financial Education and Awareness that 

provided international guidance useful 

in improving financial education and 

awareness in OECD and non-OECD 

countries. The OECD report highlights 

the importance of financial education in 

terms of helping individuals budget and 

manage their income, save and invest 

efficiently, and avoid becoming victims 

of fraud. The report also stresses the 

need for financially educated individuals 

to focus on increasing knowledge of 

investment guidelines and consumer 

protection laws. The implementation 

of these voluntary guidelines and good 

practices will vary from country to country, 

taking into consideration the various 

economic, social, demographic, and 

cultural factors of different nations.

The International Organization of Securities 

Commissions
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The IOSCO is an international 

organization with approximately 181 

member regulators that together oversee 

more than 90 percent of the world’s 

securities markets. The IOSCO and its 

member organizations work together to 

try to ensure fair, efficient, and sound 

regulation of the world’s financial markets.

One of the main focuses of IOSCO is to 

encourage the global objective of robust 

investor protection. The IOSCO and its 

member organizations recognize that 

to achieve the high levels of investor 

protection, they need to focus on 

promoting financial literacy across the 

globe. To this end, many individual IOSCO 

member organizations have created 

their own in-country investor education 

programs. These education initiatives 

include consumer publications, hotlines, 

Web sites, investor alerts, financial literacy 

curricula, town meetings, investing tools, 

and plain language disclosure documents.

Additionally, the IOSCO and its working 

committees have published several reports 

on global investor education efforts.

One such report, published in 2002, 

focused on emerging market countries 

and indicated that 27 of 33 developing 

countries surveyed had some type of 

investor education initiative in place. The 

report noted that the main goals behind 

initiating investor education programs in 

these emerging market countries was to 

improve financial and investment literacy 

among local investors and to increase 

awareness of investors’ rights and duties 

and public interest in market development 

and growth. This report demonstrates 

securities regulators’ global concern for 

promoting financial literacy as part of 

their overall investor protection mission.

The Counsel of Securities Regulators 

of the Americas

The COSRA was founded in 1992 as an 

organization designed to provide a mutual 

forum for cooperation and communication 

amongst securities regulators in the 

Western Hemisphere. The COSRA 

currently includes more than 31 member 

organizations from 26 countries in North, 

South and Central America, as well as 

the Caribbean. Since its inception, the 

COSRA has focused on the need for strong 

investor education programs. The COSRA’s 

focus on investor education comes 

from the recognition that widespread 

participation in financial markets is in the 

best interest of economic development. 

In the 1990s, the COSRA developed 

an investor education and protection 

campaign designed to serve as a catalyst 

for its member organizations throughout 

the region. As early as 1998, the COSRA 

held an investor education week where 

each of its members conducted a domestic 
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investor education campaign. Based on 

this campaign, a continuing annual effort 

was launched by member countries to 

provide education programs to investors 

in their respective 

countries. These programs 

have included town 

meetings, radio and 

television shows, seminars, 

brochures, public service 

announcements, and tollfree telephone numbers 

for investor questions 

and complaints. The 

COSRA campaigns strive 

to provide investors with 

information about the 

importance of investing, 

how to choose investments 

wisely, and the use of 

investment professionals.

International Securities 

Association Organization

An international securities association 

organization is composed of trade and 

self-regulatory associations in eleven 

countries and is a member organization 

that is aimed at encouraging growth of 

the international securities markets. This 

organization believes investor education 

is critical to the long-term growth of the 

international securities markets. As such, 

one of its major policy initiatives is to 

focus on effective international investor 

education efforts. The organization’s 

members believe that educated consumers 

who are able to make informed judgments 

regarding their investments are more apt 

to invest in securities products, promoting 

their own well-being, which will in turn 

contribute to the growth of securities 

markets, higher levels of savings, and a 

more efficient allocation of capital.

To demonstrate its commitment to investor 

education, the organization published 

a paper in 2004 that endorsed several 

principles and best practices focused on 

providing investor education.

These principles focus 

on the need for broad, 

effective dissemination of 

comprehensive investor 

education programs by 

organizations in the securities 

industry. The organization 

also focuses on applying 

these investor education 

principles to enhance 

the continued growth of 

international securities 

markets. For example, 

members of the organization 

are currently working with 

the International Forum for 

Investor Education (IFIE).

IFIE provides information 

on investment processes in 

the international financial 

market and on investor education 

programs in different parts of the world. In 

addition, IFIE provides the most up-to-date 

information on current trends in investor 

education through the dissemination 

of relevant research to its members.

Financial Services Regulatory Agency 

(United Kingdom)

The non-governmental financial 

services regulatory agency in the United 

Kingdom (UK) is an independent nongovernmental body given statutory powers 

by the Financial Services and Markets 

Act 2000.  Its overall aim is to promote 

efficient, orderly, and fair markets and to 

help retail consumers achieve a fair deal. 

The agency’s primary focus is to regulate 

financial service providers in the UK, 

but it also has other statutory objectives, 
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one of which is to promote public 

understanding of the financial system.

In November 2003 the agency proposed 

to develop and implement a national 

strategy for financial capability, working 

in partnership with a wide range of 

other organizations. The chief executive 

chairs a steering group comprising 

senior representatives of core partners 

— government, firms, employers, notfor-profit organizations, consumer 

representatives and the media.  The 

agency recognizes that improving 

financial capability is complementary to, 

not a substitute for, firms treating their 

customers fairly.  Consumer understanding 

and awareness influence both the 

nature and intensity of the regulation 

needed for consumer protection and 

whether consumers derive benefits from 

competition in the market place.

The Financial Capability Steering Group 

has identified seven priority projects: 

school, young adults, workplace, families, 

planning ahead for retirement, borrowing 

and the role of generic advice.  Each of 

these priorities is being taken forward by a 

specially convened working group.  Steps 

are being taken to enable the impact of 

the national strategy to be measured.

Central Council for Financial Services 

Information (Japan)

In Japan, financial services information 

activities are conducted by the 

Central Council for Financial Services 

Information. The Central Council’s 

mission is to educate the public about 

the importance of basic financial and 

economic knowledge related to daily life.

Since 1983 the Central Council has been 

engaged in the nationwide promotion of 

financial and economic knowledge and 

education through a variety of multi-media 

efforts, such as newspapers, videotapes, 

a Web site, a free computer consultation 

service, and a regular survey on household 

finances. In its outreach efforts, the Central 

Council launches multi-media campaigns 

to increase basic financial education 

knowledge, hosts life planning events, 

provides consulting services, and partners 

with government institutions, schools, 

families, and communities to conduct 

activities that strive to teach children the 

importance of a family budget and debt 

management.  The Central Council is 

comprised of experts in financial services 

information and representatives of 

financial, industrial, communications, 

community and similar organizations.

Australian Securities and 

Investments Commission

The Australian Securities and Investments 

Commission (ASIC) has an active 

financial literacy program, and has 

established a national strategy as a part of 

its Consumer and Financial Literacy Task 

Force. To develop its strategy, the ASIC 

has conducted research on successful 

financial literacy models in the United 

Kingdom and the United States and has 

surveyed Australians on financial literacy 

issues. Through support from a major 

bank, the local survey has demonstrated 

that financial literacy among younger and 

older people requires specific attention. 

The ASIC is employing innovative 

approaches to reach these specific groups, 

such as a comic strip called The Max, 

targeted toward 14- to18- year-olds and 

designed to appeal to this age group.

2. Encouraging Global Partnerships 

Given the global economy and the benefit 
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of sharing knowledge at an international 

level, better communication and 

education among nations — particularly 

through partnerships — would 

allow for more rapid assimilation of 

improvements throughout the world.

Nations are working to establish 

comprehensive strategies to direct 

available government resources to educate 

consumers. Successful governmental 

approaches are emphasizing effective 

collaborations with non-profit and the 

private sector. Through partnerships 

with organizations like the worldwide 

representative of credit unions, a global 

non-profit organization that works 

with students, Asia-Pacific Financial 

Education Exchange, and Germany’s 

Oeconomix, nations have added to their 

capacity to develop public awareness 

campaigns and financial educational 

materials, as well as deliver services 

to citizens who need them most.

Worldwide Representation of Credit Unions

The organization that provides worldwide 

representation for credit unions serves 

as a leading advocate and platform for 

knowledge exchange and functions as a 

development agency for credit unions. The 

organization also presents an opportunity 

to promote financial education in many 

countries. This organization represents 

the interests of more than 40,000 credit 

unions in 84 countries serving 123 

million credit union member-clients.

The organization currently carries out 

technical assistance programs in ten 

countries focused on improving financial 

performance, mobilizing savings and 

increasing outreach to create access to 

quality credit unions for everyone.

A United States national association of 

credit unions is the organization’s largest 

member. U.S. credit unions are linked to 

credit union movements in developing 

nations through an international 

partnership. Fifteen U.S. credit union 

leagues have entered into partnership 

agreements, leveraging U.S. foreign 

aid by providing technical assistance 

and exchanging innovative approaches 

to serving credit union members with 

partner movements. The not-for-profit 

cooperative structure of credit unions is 

the same around the world, with “one 

member, one vote” guiding the election of 

board members, determining the future 

of the financial institution, and ultimately 

helping to create ownership societies.

Global Non-profit Organization Focused 

on Free Enterprise Spreads 

Financial Literacy Internationally

Financially focused students throughout 

the world are not limited by national 

boundaries as they work together on free 

enterprise issues. A global non-profit 

organization that works with students 

on 1,800 university campuses in more 

than 40 countries provides opportunities 

to learn about free enterprise. This 

organization helps students develop 

financial literacy skills and identifies 

opportunities for individuals to volunteer 

in their local communities by teaching 

personal finance, entrepreneurship, 

business ethics, and market economics.

International Foundation Creates Financial 

Education Resources on Two Continents

In Asia, a U.S. private sector foundation 

partnered with one of the world’s top 

business schools, and hosted the women’s 

financial education conference in Hong 

Kong. A key outcome of the conference 

was the idea to create an online knowledge 

and learning platform that will give local 
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financial education providers greater access 

to training and resource materials, allowing 

them to share their knowledge and 

experience with more women as well as 

the wider community at a grassroots level.

In Germany, the same foundation is 

working with the Institute of German 

Economics to develop an innovative CDROM and Internet-based program which 

contains lesson plans, visual aids, and 

supplementary resources to help educators 

teach students about personal and family 

financial management, entrepreneurship, 

and corporate finance. In 2004, more than 

650 teachers registered for the program.

Across the world, nations are focusing 

additional attention and resources on 

financial literacy efforts. Through the 

cultivation of public-private partnerships 

like these, governments can help 

their citizens secure the necessary 

information and comfort level needed 

to access relevant financial services.

Call to Action

Tactic Employed: Partnerships 

13-1 Between the third quarter of 2006 and the second quarter of 2007, the Treasury 

Department will host an international summit on financial education. To bring 

about this multinational dialogue the Treasury Department will invite the central 

government authorities responsible for financial literacy in their respective nations 

to convene and discuss recent developments, innovative methods, and successful 

strategies for improving financial literacy in their home countries.

Endnotes

 1 ANZ Survey of adult financial literacy [Final report]. (2003, May) Melbourne, Victoria: Roy Morgan 

Research.
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Acronyms

National Strategy for Financial Literacy Acronyms 

APR Annual Percentage Rate

ASIC Australian Securities and Investment Commission

ATM Automated Teller Machine 

CFTC Commodity Futures Trading Commission

COSRA The Council of Securities Regulators of the Americas

CPA Certified Public Accountants

CPAI Corrections Program Assessment Inventory

CRA Credit Reporting Agency 

CSREES Cooperative State Research, Education, and Extension Service

DOD U.S. Department of Defense

DOL U.S. Department of Labor 

EITC Earned Income Tax Credit

ESA Education Savings Account

ETF Mutual Fund and Exchange Traded Fund

FACT Act Fair and Accurate Credit Transactions Act 

FBI Federal Bureau of Investigation

FCRA Fair Credit Reporting Act

FDIC Federal Deposit Insurance Corporation

FFCP Family Financial Counseling and Planning

FHA Federal Housing Administration

FHLB Federal Home Loan Bank

Acronyms
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Acronyms

FRB Federal Reserve Board

FRTIB Federal Retirement Thrift Investment Board

FSA Financial Services Authority

FTC Federal Trade Commission 

GAO U.S. Government Accountability Office 

GED General Educational Development

GSA U.S. General Services Administration

HDHP High Deductible Health Plan

HHS U.S. Department of Health and Human Services 

HSA Health Savings Account

HSFPP High School Financial Planning Program

HUD U.S. Department of Housing and Urban Development 

IDA Individual Development Account

IFIE International Forum for Investor Education

IOSCO The International Organization of Securities Commissions

IRA Individual Retirement Account

IRS Internal Revenue Service

ITIN Individual Tax Identification Number 

LITC Low-Income Taxpayer Clinic

NASD National Association of Securities Dealers

NASAA North American Securities Administrators Association

NCPW National Consumer Protection Week

NCUA National Credit Union Administration

OCC Office of the Comptroller of the Currency
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Acronyms

ODEP Office of Disability Employment Policy

OECD Organization for Economic Co-operation and Development

OFE U.S. Department of the Treasury’s Office of Financial Education 

OPM U.S. Office of Personnel Management

OTS Office of the Thrift Supervision

PSA Public Service Announcement 

SAFE Strategy for Ensuring Financial Empowerment

SBA U.S. Small Business Administration

SEC U.S. Securities and Exchange Commission

SEP Simplified Employer Pension

SIMPLE Savings Incentive Match Plan for Employees

SSA Social Security Administration 

SSDI Social Security Disability Insurance

SSI Supplemental Security Income

TAS Taxpayer Advocate Service

TCE IRS Tax Counseling for the Elderly Program

TSP Thrift Savings Plan

USDA U.S. Department of Agriculture

VITA IRS Voluntary Income Tax Assistance Program

WISE Winning through Investment Strategies and Education

WOTC Work Opportunity Tax Credit
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125

Appendix A

Financial Literacy 

and Education 

Commission

Other Commercial SectorSpecific Meeting

Location:

Securities and Exchange Commission, 

450 5th Street, NW, Washington, D.C.

Date:

February 25, 2005

Discussion Moderators

The discussion was moderated by 

Dan Iannicola, Treasury Department; 

John Nester, Securities and Exchange 

Commission; and Carolyn Welch, 

Federal Reserve Board.

Discussion Participants

DAN IANNICOLA, Treasury Department

JOHN NESTER, Securities and 

Exchange Commission

CAROLYN WELCH, Federal Reserve Board 

SUSAN WYDERKO, Securities 

and Exchange Commission

MICHAEL BEACHAM, Money 

Savvy Generation

LAURA DAMBIER, Lincoln 

Financial Group

BILL DEERY, REMTECH, Inc./TimeMAPS

GENE FULLER, REMTECH, 

Inc./TimeMAPS

MICHELLE GLASSBURN, 

Eleve Group, Inc.

MARK GUIMOND, American 

Association of Debt Management

KATY JACOB, Center for 

Financial Services Innovation

CHRISTOPHER JACOBS, American 

Council of Life Insurers

JENNA KEEHNEN, U.S. Organizations 

for Bankruptcy Alternatives

MATHILDA RICHARDSONWHITFIELD, AAA Straight Forward

ELINORE ROBEY, Charles 

Schwab Foundation

JOANNE SEYMOUR, Dynaminds, Inc.

AMY TRAVERSA, Lincoln Financial Group

CAROL WALKER, Financial Freedom, Inc.

Primary Focus of Meeting

Participants discussed the shared 

responsibility for better educating 

consumers on financial issues. Successful 

programs and initiatives require the 

involvement of both public- and privatesector organizations, with parties playing 

specific roles that emphasize their strengths 

in the dialogue. In addition to effective 

materials and financial education curricula, 

public awareness campaigns are a strong 

component of increasing consumer 

knowledge of financial issues and concerns.

Key Discussion Points

Role of Federal Government
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Participants noted that the Federal 

government plays an appropriate and 

vital role in financial education efforts, 

particularly by focusing on efforts that 

emphasize the importance of financial 

education and place the topic on par, 

in terms of community concern, with 

issues such as nutrition, physical fitness 

and general health. To aid this effort, the 

Federal government should study the 

types of financial education programs 

and delivery mechanisms that are most 

effective and most needed. Research 

also could be used to establish uniform 

standards for financial education 

programs and to help highlight best 

practices as models for effective 

partnerships, materials development, 

delivery, and results measurement.

The Federal government also should 

catalogue existing financial education 

materials, oversee the development of 

new materials, and provide incentives for 

financial education program development 

and delivery. Specific legislative and 

policy changes also could be enacted 

to simplify financial transactions.

Effective Delivery Mechanisms

Participants identified the public school 

system as an important delivery channel 

for financial education, indicating that 

financial education efforts should be 

required, either as part of the current 

curricula (through integration of personal 

finance lessons) or as a specifically 

designated requirement for graduation. In 

addition to the schools, special emphasis 

should be placed on providing financially 

distressed families with information on 

credit counseling and debt management 

plans, working with community-based 

programs to reach children in “fun” 

environments, and using computer-based 

materials to reach those individuals who 

do not respond to group education.

Employers and family courts also are seen 

as valuable outlets for financial education 

and counseling, particularly if awareness 

programs are “turnkey” for easy use 

and integration by all organizations.

Materials and Curricula Development

There was no consensus on who should 

be primarily responsible for developing 

financial education resources. The public 

sector is an unbiased and credible source 

for information, but may be a better 

coordinator than originator. The private 

sector is a strong source of innovative 

and creative materials and programs.

The primary source of the materials is 

not as important as ensuring that the 

materials are thoroughly and systematically 

distributed and adhere to a consistent set 

of standards. The point also was made 

that sales and marketing materials from 

private sector sources are not the same 

as true financial education materials.

Fundamental Financial Education Skills

Participants identified several skills that 

should be fostered in financial education 

efforts: 1) budgeting and saving; 2) 

shopping for financial products and 

services; 3) delaying gratification; 4) 

understanding credit cards; 5) setting 

financial goals throughout life; and 6) 

understanding options and resources 

available when confronted with financial 

difficulties such as debt negotiation, credit 

counseling and debt management plans.

Public Service Announcements and 

Awareness Campaigns

Public awareness campaigns focused on 

financial education issues offer a wide 

range of benefits for consumers. National 

efforts, including the distribution of public 

service announcements, can help educate 
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Americans on the resources available for 

those in financial distress, the power and 

cost of money (impact of compounding 

from both debt and savings perspectives), 

and key financial concepts such as interest 

rates, compounding and the timetable for 

paying off revolving debt. In addition to a 

factual approach, some participants stated 

it may be necessary to use “shock value” 

to illustrate the negative outcomes such as 

bankruptcy and diminished quality of life.
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Appendix A

Financial Literacy 

and Education 

Commission

Government Sector Public 

Meeting

Location:

Federal Deposit 

Insurance Corporation (FDIC)

550 17th Street, N.W., 

Washington, D.C.,

Date:

March 4, 2005

Discussion Moderators

The discussion was moderated 

by Lee Bowman, FDIC, and Dan 

Iannicola, Treasury Department.

Discussion Participants

DAN IANNICOLA, Treasury Department

LEE BOWMAN, FDIC

RALPH AVERY, Administrative 

Office of the U.S. Courts

REBECCA FANNING, Administrative 

Office of the U.S. Courts

HILLARY HUNT, Commonwealth 

of Pennsylvania

DARRELL LLOYD, Internal 

Revenue Service

DAVID MANCL, Wisconsin Jump$tart, 

Coalition of Personal Finance for Youth

JERRY MUNK, National American 

Securities Administrator Association

ADAM RABINER, New York 

State Banking Department

DAPHNE SMITH, National American 

Securities Administrator Association

JUSTIN SOUTHERN, West 

Virginia State Auditor's Office

MARGARET WARREN, 

Internal Revenue Service

TIM MULLEN, National Association 

of Insurance Commissioners

Primary Focus of Meeting

Participants described several ideas for 

a national public awareness campaign 

on financial literacy. Several indicated 

the need for a sustained, multi-year 

approach, initiating a campaign that will 

result in lasting changes on financial 

behaviors. Campaign messages should 

be positive and empowering, particularly 

in the area of asset building. Messages 

should also be sensitive to and include 

different cultures, income levels, and 

languages. Special efforts should be 

made to make financial education 

“trendy” for both youth and adults.

Key Discussion Points

Savings and Asset Building Strategy 

Best Practices

Example programs cited during the 

meeting included Individual Development 

Accounts, Earned Income Tax Credit 

refunds, Voluntary Income Tax 

Assistance (VITA) sites (particularly those 

established as a coalition where many 

financial service organizations are colocated at the site), regionally focused 

financial institution efforts (e.g. FDIC’s 

New Alliance Task Force in the Chicago 

area), and in-school bank branches.

Government’s Role in Encouraging 

Private Sector Involvement
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While there was no consensus regarding 

government’s role in financial education, 

several participants mentioned that all 

levels of government (Federal, state, 

local) should encourage various private 

sector professionals and organizations 

to volunteer time to teach financial 

education. Incentives such as continuing 

education credit or monetary incentives 

(seed money or tax breaks) could be 

provided. Workplace financial education 

programs, school-based branches of 

financial institutions, and governmentsponsored events for educators would 

also be useful. As part of its role, 

government could lead the development 

and implementation of a centralized 

measurement system for determining the 

success of financial education initiatives.

Coordination and Management of 

Financial Education Programs

Participants agreed that it is paramount 

to better educate citizens on all 

financial education programs currently 

available in the marketplace. Keeping 

existing programs up to date and better 

promoting their available resources 

should be a top priority, allowing current 

efforts to better meet consumer needs 

and broaden teaching on additional 

financial education topics as needed.

Measuring Campaign Success

Participants identified a range of ways 

to measure the success of a sustained 

national public awareness campaign.

Recommendations included monitoring 

the number of people who access their 

credit report, conducting a longitudinal 

study of children who had financial 

education and those who did not (National 

Bureau of Economic Research did such 

a study that could serve as a model), 

measuring the number of Individual 

Development Accounts and volume of 

matching funds and their impact, using 

behavioral sciences experts in the design of 

the metrics selected, comparing the volume 

of bankruptcy filings over time, conducting 

a before and after survey of awareness of 

financial scams, and considering whether 

there are measures within the No Child 

Left Behind law that might be useful in 

assessing levels of financial education.

Moving the Campaign Forward

First, states may consider establishing 

an office focused on financial literacy.

This office would understand all of the 

organizations within the state that have a 

relevant piece/function related to financial 

education. The office would coordinate 

state-relevant activities and would report 

directly to the governor. It would be 

created so it does not have a general 

fund or taxpayer dollar implications, 

and could be structured on delivery 

systems (community-based, school-based, 

workplace-based, etc.) It was noted that 

Pennsylvania presently has such an office.

At the Federal level, the government 

could serve as a clearinghouse for best 

practices and organize and coordinate 

national meetings on specific topics 

where best practices could be shared 

with state and local organizations.
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Appendix A

Financial Literacy 

and Education 

Commission 

Sector Meeting 

Summary

Education Sector Meeting

Location:

U.S. Mint, 

801 9th Street, N.W., 

Washington, D.C.

Date:

March 7, 2005

Discussion Moderators

The discussion was moderated by Marcie 

Brown, Department of Education, and 

Dan Iannicola, Treasury Department.

Discussion Participants

DAN IANNICOLA, Treasury Department

MARCIE BROWN, Department of Education

HENRIETTA FORE, U.S. Mint

JOE BOTTA, Virginia Cooperative Extension

NORINE FULLER, Fashion Institute 

of Design & Merchandising

NINA TORRES, The Hispanic Association 

of Colleges and Universities

DEBRA MINOR DRISCOLL, Oregon 

State University Extension Service

ANNE FREMION, Ohio State 

University Extension

JOYCE LASH, Iowa State 

University Extension

ANGELA LYONS, University of Illinois

WAYNE MOORE, University 

of Missouri Extension

GAYLE ROSE MARTINEZ, 

University of Wisconsin

RITA STRAUB, University of 

Wisconsin Extension

Primary Focus of Meeting

Participants discussed various ways in 

which financial education resources 

can be disseminated to all communities 

throughout the country. In viewing 

ways to most effectively disseminate 

financial education, individual 

examples of students who lacked basic 

financial literacy skills were analyzed.

Participants recommended the Federal 

government take the lead in forming 

partnerships that would allow financial 

literacy tools to reach the individuals 

and communities that need it most. 

Partnerships at all government levels, 

including non-government entities such 

as the academic community, non-profit 

institutions and the lending community 

were referenced as an extremely effective 

way to improve financial education.

Key Discussion Points

Government’s Role in Enhancing 

Financial Education

Government’s role in financial education 

should be to encourage traditional and 

non-traditional partnerships ranging 

from a broad spectrum of entities.

The Federal government should bring 

stakeholders, especially from private 

and non-profit institutions, together 

to determine the most effective way to 

reach all populations and demographics.

Also, several participants suggested the 

Department of Education partner with 
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other Federal agencies, such as the 

Treasury Department, to become more 

involved in financial education by hosting 

meetings and conducting additional 

substantive research. Several participants 

also mentioned that government incentives 

to teach and deliver financial education 

tools would be greatly effective.

Measurements of Success

Measuring success was an instrument that 

the participants felt we needed to take 

time to review and suggested that the 

Federal government may consider that it 

takes time to expect results (strong results 

cannot happen in a short time period).

The percentage of individuals filing for 

bankruptcy, testing after teaching financial 

education lessons to children, and studying 

the increase or decrease in retirement plan 

participants were all mentioned as possible 

indicators that the Financial Literacy and 

Education Commission should utilize for 

measuring overall effectiveness of collective 

efforts. In addition, it was mentioned that 

financial education stakeholders should 

look at private institutions that offer 

retirement planning education as part 

of employee orientation, versus private 

institutions that do not offer retirement 

planning education during orientation and 

compare the percentage of employees that 

choose to enroll into retirement plans. The 

group recognized the need for creative 

ways to get employee participation up in 

employer sponsored retirement plans. 

Multimedia Public Service Campaign

Participants agreed that launching a 

multimedia public service campaign 

would be extremely effective in reaching 

consumers. Tailoring a message that targets 

specific populations and communities was 

emphasized. For example, when targeting 

young people, the campaign should 

focus around an area that is popular to 

young people, and utilize this area to 

focus key financial education issues. The 

issues of savings, individual choices and 

the importance of avoiding excessive 

debt were the key overall messages that 

were discussed. Portraying the beneficial 

effects of compound interest and offering 

a way to help consumers already in 

debt were also mentioned as essential 

components to developing a strong 

awareness campaign. Some participants 

suggested that educating consumers to 

better understand their credit scores, 

and to make consumers aware of the 

effects of a bad credit score, were key 

elements to empowering consumers 

to make better financial decisions.

Financial Education at 

Post-Secondary Institutions

The need to enhance financial education 

at colleges and universities was emphasized 

and several examples about students 

who struggled with credit card debt 

were given. Several of the participants 

pointed out that the number one reason 

for dropping out of school was for 

financial reasons, not academics. Another 

participant said that she personally knew 

two college seniors who had job offers 

revoked because their hiring employers 

did a credit check and discovered that 

the students had poor credit scores.

Other participants mentioned that 

students are more likely to pay their credit 

card loans over their student loans.

Partnerships with schools and local 

banks, financial education seminars on 

campuses and payment courses on loans 

were all mentioned as possible plans 

that could help students make strong 

financial choices. Having workshops 

on college campuses was a suggestion 

that many participants supported. 
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Financial Literacy 

and Education 

Commission 

Sector Meeting 

Summary

Non-Profit Organization 

Meeting

Location:

Office of Personnel Management (OPM) 

1900 E Street, NW, 

Washington, D.C.

Date:

March 11, 2005

Discussion Moderators

The discussion was moderated by 

Marcus Beauregard, Department of 

Defense; Dan Iannicola, Treasury 

Department; and Ray Kirk, U.S.

Office of Personnel Management.

Discussion Participants

DAN IANNICOLA, Treasury Department

RAY KIRK, Office of 

Personnel Management

MARCUS BEAUREGARD, 

Department of Defense

JORDANA BEEBE, Privacy 

Rights Clearinghouse

DON BLANDIN, Investor Protection Trust

EDWIN BODENSIEK, Junior 

Achievement Worldwide

DAVID CASSERLY, Jump$tart Coalition 

for Personal Financial Literacy

THEODORE DANIELS, Society 

for Financial Education

VIRGINIA DAVIS, Native Financial 

Education Coalition

AL DUARTE, InCharge Education 

Foundation Education Foundation

BOB DUVALL, National Council 

on Economic Education

HECTOR GAMBOA, Spanish 

Coalition for Housing

DAVID GODSTED, Networks 

Financial Institute

TRACEY GORDY, Corporation 

for Enterprise Development

KAREN GROSS, Coalition for 

Consumer Bankruptcy

JOHNETTE HARTNETT, NCB 

Development Corporation

SUSIE IRVINE, American Financial 

Services Association Education Foundation

VARINY PALADINO, American 

Savings Education Council

CHERYL REYNOLDS, American Institute 

of Certified Public Accountants

JENA ROSCOE, Operation Hope, Inc.

JAY SEATON, Consumer Credit & 

Counseling Service Midwest

LINDA SHERRY, Consumer Action

MAX SIMMONS, Take Charge America
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Primary Focus of Meeting

Non-profit organizations recognize the 

need to act both nationally and locally 

to improve financial literacy across all 

audiences. Nationally, a public awareness 

campaign, including public service 

announcements, can guide discussion and 

generate excitement and interest among 

consumers. At the local level, the public, 

private and non-profit sectors can work 

together to disseminate existing resources 

and successfully implement best practices 

tailored to local community needs.

Key Discussion Points

Financial Education in the Public Schools

Participants recognized that public schools 

play an important role in improving 

financial education efforts. Participants 

stated that local schools can advance 

financial education by partnering with 

non-profits and government entities.

Public awareness and education efforts 

should work in concert with each other, 

focusing on best practices and practical 

instruction. Special emphasis should be 

paid to providing classroom educators 

the professional development and 

support needed to integrate financial 

literacy into existing curricula.

Utilizing Existing Financial Education 

Resources

Participants stated that there are a number 

of specific efforts that can be undertaken 

to leverage existing financial education 

resources and coordinate outreach efforts 

to avoid overlap or duplication. State 

governments can establish offices to help 

shepherd the process and coordinate 

state-based financial education efforts.

The Federal government can help bring 

together private, public, and non-profit 

organizations to encourage financial 

literacy activities, and the U.S. Department 

of Education in particular can work to 

facilitate the task of boosting financial 

skills among consumers for state and 

local officials. Sectors can also work 

together to establish a listserv to share 

information on best practices and to 

use social science mapping techniques 

to improve understanding on specific 

financial education programs.

Public Awareness Campaign

Participants agreed that a national 

public awareness campaign on financial 

literacy education is needed and would 

be welcomed in communities throughout 

the nation. Any new public engagement 

efforts should coordinate with existing 

efforts and should be carefully developed 

to ensure they are culturally appropriate 

and diverse. Public service announcements 

could be used to provide consumers 

with direct information on money 

management and wealth building, for 

instance, and identifying a popular 

national spokesperson was viewed as 

a potentially valuable component.

Measuring Success

Participants recommended that the 

success of financial education efforts 

can be measured in a number of ways, 

including monitoring changes in savings, 

investment and finance management 

behaviors and conducting regular 

town hall meetings to gather public 

responses. Participants recognized that 

success takes time, first through public 

awareness, then an increased level of 

knowledge, and finally behavior change.

The first year of any education effort 

should focus on general awareness.
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Financial Literacy 

and Education 

Commission 

Sector Meeting 

Summary

Lenders Meeting

Location:

Room H-C-8, 

U.S. Capitol, 

Washington, DC

Date:

March 14, 2005

Discussion Moderators

The discussion was moderated by 

Dan Iannicola, Treasury Department, 

and Barry Wides, Office of the 

Comptroller of the Currency.

Discussion Participants

DAN IANNICOLA, Treasury Department

BARRY WIDES, Office of the 

Comptroller of the Currency

THE HONORABLE DANIEL 

AKAKA, U.S. Senate

THE HONORABLE JUDY BIGGERT, 

U.S. House of Representatives

THE HONORABLE DAVID DREIER, 

U.S. House of Representatives

RHONDA BENTZ, Visa

KIM BOHANNON, North Carolina 

Credit Union League

CHRISTY MINTON, (by 

teleconference), Bancorp South

JODI MITCHELL, Mountain 

America Credit Union

CYNDY SCOTT, Tower 

Federal Credit Union

SHERYL NEAS, National 

Community Capital Association

Primary Focus of Meeting

Participants discussed the need for all 

sectors to work together to provide 

financial literacy information to 

consumers. As the Federal government, 

educators, employers, and community 

organizations work together to develop 

curricula and identify and model best 

practices, public service announcements 

and other public education efforts 

can be valuable in boosting consumer 

understanding of financial issues.

Key Discussion Points

Role of the Federal Government

Participants noted that the Federal 

government should engage in a range 

of activities to bring financial literacy to 

the public forefront and make it a part of 

the national consciousness. The Federal 

government can do this by providing 

guidance in terms of standards and best 

practices, encouraging and fostering 

partnerships across sectors, and working 

with state and local government to 

integrate financial literacy in the public 

schools. Most importantly, the Federal 

government can lend a sense of urgency 

to the issue of financial education that 

participants felt is currently absent.
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Measuring Success

Participants recommended that the 

success of financial education efforts can 

be measured in many ways, including 

how many 401(k) plans and IRAs are 

used now versus 10 years from now; 

quantifying savings rates; decline in 

bankruptcies; and declines in unsecured 

debt; pre- and post-tests to measure 

effects of financial literacy curricula in 

public schools; increases in credit scores; 

and decreases in predatory lending.

Selection and Use of Programs

The Federal government can play an 

important role in the selection of programs 

by working with trusted organizations to 

identify current financial literacy efforts 

and best practices, particularly in specific 

states and localities. Organizations such as 

community colleges, credit union leagues, 

and the USDA Cooperative Extension 

Service could also play a role in evaluating 

current programs, and all results could 

be placed on a Federal Web site. Effective 

programs should be factual (not seen as 

a sales tool), and should be presented in 

the appropriate language and format. 

Proper distribution of financial literacy 

education is key to its effective use.

Distribution can be accomplished through 

partnerships, public education, and 

professional development for educators.

Specific efforts should also focus on 

providing employers with the incentives 

to incorporate financial education in 

the workplace. Employers can bring in 

experts to explain benefits and planning.

Pastors, churches, and faith-based 

organizations can also play a role in the 

promotion of financial education.

Public Service Announcements and Public 

Awareness Campaigns

All public education efforts should answer 

the question, “What’s in it for me?” Public 

service announcements are seen as a 

valuable tool in establishing a specific call 

to action for targeted groups (high school 

students, 30-year-olds, English as a Second 

Language individuals, etc.) To reach these 

audiences successfully, PSAs and other 

outreach efforts must be tailored; a onesize-fits-all approach will not be effective.

All public awareness products should 

be written at a seventh-grade reading 

level, with checklists and similar basic 

materials effectively communicating 

the content. Content should be simple 

and streamlined, as participants believe 
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that additional background information 

risks getting in the way of the message.

Financial Literacy 

and Education 

Commission 

Sector Meeting 

Summary

Individual Respondents’ Session

Location:

Department of Health and Human 

Services, Administration for Children 

and Families, Washington, DC

Date:

March 17, 2005

Discussion Moderators

The discussion was moderated by 

Dan Iannicola, Treasury Department; 

Luke Bernstein, Treasury Department; 

and Jim Gatz, Department of 

Health and Human Services.

Discussion Participants

DAN IANNICOLA, Treasury Department

LUKE BERNSTEIN, Treasury Department

JAMES GATZ, Health and Human Services

JIM BILELLO

KELVIN BOSTON

CATHY BOWEN 

RUTH FREEMAN

KAREN HARRIS

JULIE JUDY

CHERYL MOORE

SHANNON MOYER

JANE SCHUCHARDT

MICHAEL SCHUTT

ROBERT WEAGLEY 

JUDY WEISS 

ANNE YOEMAN

Primary Focus of Meeting

Raising financial literacy is a long-term 

process that requires multiple strategies 

and approaches. Successful efforts need 

to be developed carefully and should 

include specific engagement strategies 

and assessment mechanisms. Participants 

believe there are specific roles for 

public- and private-sector interests at 

the Federal, state, and local levels, and 

that those involved in financial literacy 

should understand and successfully 

execute their roles and capitalize on the 

education successes of other sectors.
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Key Discussion Points

Current State and Consequences of 

Financial Literacy

According to participants, there is a dearth 

of financial skills among the population 

at large and among specific population 

subsets. More work still needs to be done to 

help financial institutions understand the 

benefits, both individually and nationally, 

to improving financial literacy among 

consumers, particularly with immigrants, 

families of all income brackets, small 

businesses, and high school and postsecondary students. The impact of such 

education could result in a stronger 

national economy, greater family selfsufficiency, and a reduction in predatory 

lending and reliance on the cash economy.

Existing financial literacy efforts need to 

focus more on measuring programmatic 

effectiveness. Currently, there is little 

knowledge on the impact of financial 

education on individual or institutional 

behavior. Participants believe the Federal 

government could lead an effort to 

identify and promote best practices 

in financial education initiatives, 

developing guidelines to evaluate the 

short- and long-term effects of such 

efforts on families and communities.

Role of the Federal Government

Participants stated that the Federal 

government’s primary role is to identify 

effective financial literacy practices and 

promote those best practices through 

recognized information channels (such 

as MyMoney.gov). Consumers should be 

provided credible and useful information 

that specifically addresses their needs 

and personal situations. In addition to 

distributing information, the Federal 

government should collect, analyze and 

disseminate data on effective practice and 

design to support those implementing 

financial education programs at state and 

local levels. Targeted education efforts 

might focus on, for example, consumers, 

employers, and financial institutions, 

among others. The Federal government 

could provide incentives among Federal 

programs and private institutions to 

reward success in financial education.

Role of State and Local Institutions

Educational institutions, financial 

institutions, and private faith-based and 

community-based organizations also 

play an important role in increasing 

financial skills. Participants said state 

and local institutions could replicate or 

adapt to state and local conditions the 

best practices identified by the Federal 

government. Specific emphasis could be 

placed on providing financial education 

through the local public school system 

(local schools might consider instituting 

specific financial literacy requirements 

for graduation). State and local networks 

also could tap Cooperative Extension, 

colleges and universities and private 

financial institutions to plan, implement, 

and evaluate education efforts. Financial 

institutions could work with employers to 

develop local or corporate-based incentives 

— such as loan forgiveness, qualification 

for home mortgage, or lower interest rates 

— for achieving financial benchmarks.

Measuring Success

Participants recommended that the 

success of financial education efforts 

can be measured in a number of ways, 

including changes in the level of 401(k) 

opportunities, increased personal 

savings, credit repair, and the number 

of first-time account holders. There 

was strong agreement that measures 

of effectiveness should be realistic 

with respect to time and behaviors.
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Public Awareness Campaigns

Participants agreed that all engagement 

and education strategies need to be 

carefully tailored to consumers at large and 

key population subsets. Communications 

efforts should be positive and clear, and 

provide audiences with the tools and 

resources they need to improve financial 

behaviors. Any public awareness campaign 

should be integrated so that messages 

layer and reinforce each other, regardless 

of source and intended audience.

Efforts should be carefully planned, 

executed, and measured, and adjustments 

should be made based on campaign 

success. Multiple media, physical 

locations, and modes of access should 

be used to reach effectively different 

population subsets, including students, 

immigrants, older workers, rural 

versus urban dwellers and persons at 

different stages of their financial lives.
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Appendix B