Financial literacy has been defined as the ability to use knowledge and skills to manage financial resources effectively for a lifetime of financial well-being. To make sound financial decisions, individuals need to be equipped not only with a basic level of financial knowledge but also with the skills to apply that knowledge to financial decision making. Thus, financial literacy encompasses both financial education—the process of improving consumers’ understanding of financial products, services, and concepts—as well as consumers’ behavior as it relates to their ability to make informed judgments. In the United States, a number of trends have emerged in recent years that underscore the importance of financial literacy. For example, investment options and credit products have grown in number and complexity. In addition, consumers are assuming greater responsibility for their own retirement savings, with traditional defined- benefit retirement plans becoming increasingly rare. Evidence suggests that many U.S. consumers could benefit from improved financial literacy. In a 2010 survey of U.S. consumers prepared for the National Foundation for Credit Counseling, a majority of consumers reported they did not have a budget, and about one-third were not saving for retirement. In a 2009 survey of U.S. consumers by the FINRA Investor Education Foundation, a majority believed themselves to be good at dealing with day-to-day financial matters, but the survey also revealed that many had engaged in financial behaviors that generated unnecessary expenses and fees and had difficulty with basic interest and other financial calculations. A wide variety of organizations provide financial education resources, including nonprofit community-based organizations, consumer advocacy organizations, financial services companies, trade associations, employers, and local, state, and federal government entities. Some financial literacy initiatives are aimed at the general population, while others target certain audiences, such as low-income individuals, military personnel, high school students, seniors, or homeowners. Similarly, some financial literacy initiatives cover a broad array of concepts and financial topics, while others target specific topics, such as managing credit, investing, purchasing a home, saving for retirement, or avoiding fraudulent or abusive practices. Efforts to improve financial literacy can take many forms. These can include one-on-one counseling; curricula taught in a classroom setting; workshops or information sessions; print materials, such as brochures and pamphlets; and mass media campaigns that can include advertisements in magazines and newspapers or on television, radio, or billboards. Many entities use the Internet to provide financial education, which can include information and training materials, practical tools such as budget worksheets and loan and retirement calculators, and interactive financial games. Youth-focused financial education programs are generally tied to a school curriculum. In 2009, 13 states had requirements for a course in personal finance education prior to high school graduation, and 34 states required personal finance education standards to be implemented to some extent in the curriculum, according to a survey by the Council for Economic Education. In 2009, more than 20 federal agencies had initiatives related to improving financial literacy. In some cases, federal agencies develop and provide financial education directly. For example, FDIC has developed and disseminated Money Smart, a comprehensive financial education curriculum, and the Federal Trade Commission has developed numerous brochures and Web resources on topics such as credit products, identity theft, and fraudulent schemes. In other cases, federal agencies provide grants or other support to nongovernmental organizations that provide the direct financial education. For example, in fiscal years 2009 and 2010, Treasury’s Financial Education and Counseling Pilot Program provided grants to eligible community and other organizations to provide financial education and counseling services to prospective homebuyers. The multiagency Financial Literacy and Education Commission, which was created in 2003, was charged with, among other things, developing a national strategy to promote financial literacy and education, coordinating federal efforts, and identifying areas of overlap and duplication. The commission is chaired by the Secretary of the Treasury and Treasury’s Office of Financial Education and Financial Access provides its primary staff support. In addition, the Dodd-Frank Act required the establishment of an Office of Financial Education within the Consumer Financial Protection Bureau, and the director of the bureau will serve as Vice Chair of the Financial Literacy and Education Commission. The federal government does not generally certify or approve financial literacy providers or regulate the content of the services they provide, except in certain instances. For example, the Bankruptcy Code requires individuals to receive budget and credit counseling from an approved provider before filing a petition for bankruptcy and also requires bankruptcy petitioners to complete an instructional course on personal financial management in order to have their debts discharged. As such, the Department of Justice’s U.S. Trustee Program approves providers who meet certain criteria to provide these services. In addition, HUD approves housing counseling agencies to provide certain services and awards competitive grants to approved agencies to fund those services. While there is a fairly extensive literature on financial literacy, relatively few evaluations of financial literacy programs have been published that use empirical evidence and even fewer evaluations measured a program’s impact on the participants’ behavior. One reason for this may be that the field of financial literacy is relatively new and many programs have not been in place long enough to allow for a long-term study of their effectiveness; for example, many of the key federal financial literacy initiatives were created only within the past 10 years. In the view of some experts and practitioners in the field of financial literacy with whom we spoke, the approaches that are most effective in meaningfully improving consumers’ financial behavior are not fully known. After conducting a literature search, we identified 142 papers published since 2000 that addressed the value or effectiveness of financial literacy and were authored by individuals or organizations that appeared to have significant experience or expertise in the field. We focused our review on 29 studies we identified among this group that met four additional criteria. First, they evaluated the outcomes of a specific program, approach, or policy. Second, they used empirical evidence—that is, they used data rather than anecdotal evidence. Third, they were based on original data collection rather than reviews of existing literature. Finally, they were determined to be sufficiently reliable and methodologically rigorous for inclusion in our review. The evaluations of financial literacy programs that are most reliable, useful, and definitive include three key elements, according to some experts with whom we spoke and literature that we reviewed: they measure behavioral change, track participants over time, and use a control group. The extent to which the studies we reviewed incorporated these elements varied: Measure behavioral change: Of the 29 studies we reviewed that evaluated the effectiveness of a financial literacy program or initiative, 22 measured, among other things, its impact on the participants’ behavior. The remaining seven studies did not measure the program’s impact on behavior but instead measured outcomes such as improvements in knowledge, attitude, or anticipated behavior. In general, the ultimate goal of financial education is to favorably affect consumer behavior, such as to promote improved saving and spending habits, wise use of credit, and avoidance of fraudulent or disadvantageous financial products. A financial education program may be of limited effectiveness if, for example, it increases participants’ knowledge of retirement savings issues but does not actually affect, on average, participants’ behavior through increased retirement contributions or other measures. Track participants over time (longitudinal): Eighteen of the 29 evaluations we reviewed were longitudinal—they involved the repeated examination of the study participants over time. Longitudinal studies of financial education programs can be important because these programs often seek to affect long-term outcomes, such as improved credit scores or increased retirement savings, that may occur several months or years after the end of the program. For example, a financial education program that seeks to increase homeownership would, ideally, track whether participants had become successful homeowners over a period of many years. Involve a control group: Seven of the 29 evaluations we reviewed used a control group—that is, the evaluation measured participants in the financial education program against a comparison group that did not participate in the program. Use of a control group helps to isolate the impact of a financial education program from other influences, such as changes in the overall economy, and provides a baseline against which to compare the program’s effect. It also can help avoid selection bias because individuals who choose to participate in a financial education program may be those who are most interested and motivated to change or who place a greater value on their future. Experts in financial literacy and program evaluation have cited many significant challenges to conducting rigorous and definitive evaluations of financial literacy programs that include these elements. For example, measuring a change in participant behavior is much more difficult than measuring a gain in knowledge, which can often be captured through a simple post-course test. Measuring behavior often relies on self-reported information, which can be inaccurate, or may require tracking credit scores, account balances, or other data that may be proprietary. Moreover, many organizations lack the financial resources or expertise to conduct program evaluation, particularly long-term evaluation involving a control group, which can be especially time and labor intensive. This is often the case when evaluations require tracking populations that are more transient in nature, such as college-aged individuals. In addition, because many variables can affect consumer behavior and decision making, ascribing long-term changes to a particular program is difficult. Moreover, some of the evaluation literature we reviewed noted that longitudinal studies using a control group and measuring behavioral change cannot be practically or realistically applied to all programs. Consequently, many evaluations rely on other measures that are less complex and less resource intensive to measure, such as knowledge gains, changes in attitudes, or outputs. One academic review of financial literacy evaluations found that the majority of financial education programs it reviewed only measured program outputs, such as the number of individuals served or the volume of materials distributed. The 2008 National Research Symposium on Financial Literacy and Education noted that one challenge in developing and implementing successful program evaluation for financial education is the field’s variety of core content, delivery methods, and target populations, as well as differences in the goals and objectives of specific programs.