History of Financial Literacy – The First 200 Years

by | 01/27/14 | Commentary, Insight, Uncategorized

The history of financial literacy is remarkable and all who have shared in the global growth of the financial education movement should be proud of the substantial impact of our collective efforts, from city to city, and from generation to generation.

The following is a brief snapshot of some top historical developments that have driven the impact and success of financial literacy throughout the world:

August 23, 1787 - In a letter to Thomas Jefferson, dated August 23, 1787, John Adams recognized the need for financial literacy: “All the perplexities, confusions, and distresses in America arise, not from defects in their constitution or confederation, not from a want of honor or virtue, so much as from downright ignorance of the nature of coin, credit, and circulation.”

Smith-Lever Act - In 1914, the Smith-Lever Act created the Cooperative Extension Service in the United States to provide learning experiences that would develop skills people needed at home, on the farm and in their community, including financial skills.

The 1950s - In many countries throughout the world, the 1950s marked a time when the issues of financial management, income and expenditure, security and retirement, housing, budgeting and saving comprised fifty percent of the research that was conducted in the field of home economics. Financial literacy continued to gain greater prominence in the field of education and beyond.

The 1970s - In the 1970s, credit union volunteers recognized the need to provide financial education to young people, as credit unions formed the National Youth Involvement Board (NYIB) to focus on youth financial literacy.

The Jump$tart Coalition (1995) - The Jump$tart Coalition began championing personal financial literacy in the United States.  William E. Odom, former Chairman and CEO of Ford Motor Credit Corporation, is credited with the concept that led to the formation of the Jump$tart Coalition in 1995.

Mandell Survey (1996) - Dr. Lewis Mandell developed the financial literacy survey that now is a hallmark of the Jump$tart Coalition’s work.

Financial Liberalization (2000) - Japan’s Minister of Finance convened meetings on the urgent need of financial literacy due to the rapid financial liberalization in the country.

Promotion of Consumer Education (2002) - Consumer education became a major focus throughout Asia in the early 2000s.  In 2002, the Guidelines of the Promotion of Consumer Education on Finance were published by the Central Council for Financial Services Information.

Financial Capability (2003) - The Financial Services Authority (FSA) in the United Kingdom (UK) started a national strategy on financial capability in 2003.  The term “financial capability” gained more widespread use in several countries throughout Europe and Africa.

Financial Literacy and Education Improvement Act and FACTA (2003) - In the United States, the Financial Literacy and Education Commission was established under the Financial Literacy and Education Improvement Act, which was part of the Fair and Accurate Credit Transactions Act (FACTA) of 2003, to improve financial literacy and to develop a national strategy on financial education.  The United States Senate also designated April as Financial Literacy for Youth Month.

OECD and Global Financial Literacy (2003) - The Organization for Economic Co-operation and Development (OECD) started an inter-governmental project in 2003 with the objective of providing ways to improve financial education and literacy standards through the development of common financial literacy principles.

National Consumer and Financial Literacy Taskforce (2004) - The Australian Government established a National Consumer and Financial Literacy Taskforce in 2004, which recommended the creation of the Financial Literacy Foundation.  The Foundation established an educational website titled “Understanding Money” and the functions of the Foundation were later transferred to the Australian Securities and Investments Commission (ASIC).

Citigroup’s $200 Million Financial Education Commitment (2004) - Citigroup announced a 10-year, $200 million commitment to meet the growing financial education needs of the communities that Citigroup served.

Resolution 316 and National Financial Literacy Month (2004) - The United States Senate passed Resolution 316 that officially recognized April as National Financial Literacy Month.

360 Degrees of Financial Literacy (2004) - The CPA profession launched a unified financial literacy initiative called 360 Degrees of Financial Literacy. The effort brought together the AICPA, state CPA societies and individual CPAs to address and tackle the widespread financial illiteracy epidemic.

OECD International Study (2005) - A comprehensive international study by OECD was published in 2005 analyzing financial literacy surveys in several countries.

Financial Literacy in India (2007) - The Reserve Bank of India launched an initiative in 2007 to establish Financial Literacy and Credit Counseling Centers throughout the country that offer free financial education and counseling to both urban and rural populations.

Presidential Advisory Council on Financial Literacy (2008) - United States President George W. Bush created the President’s Advisory Council on Financial Literacy to focus on solutions for Americans to understand financial matters.

Indonesia – The Year of Financial Education (2008) - The Indonesian government declared 2008 the year of financial education, with a stated goal of improving access to financial services by increasing financial literacy.

International Gateway for Financial Education (2008) - The Organization for Economic Co-operation and Development (OECD) launched the International Gateway for Financial Education as a clearinghouse for financial education programs, information and research worldwide.

World Bank and Russia’s $15 Million Financial Literacy Program (2008) - The World Bank and the Russian Federation announced a partnership to support an international program in financial literacy and financial education through the $15 million Russia Financial Literacy program.

Consumer Education From Finance Companies (2009) - Automobile finance companies and retailers provide consumer education through Americans Well-Informed on Automobile Retailing Economics.

Survey of Personal Financial Literacy (2009) - The Council for Economic Education conducted a 2009 survey of the U.S. states and found that 44 states had K-12 personal finance education or guidelines in place. Results from the Jump$tart Survey of Personal Financial Literacy indicated low levels of financial literacy among American youth.

Financial Literacy Month in Canada (2009) - In Canada, the Financial Consumer Agency of Canada (FCAC) and the Financial Literacy Action Group (FLAG) established Financial Literacy Month in November 2009.

Consumer Financial Education Body (2010) - In the United Kingdom, the Financial Services Act 2010 included a provision to establish the Consumer Financial Education Body, known as CFEB.  From April 26, 2010, CFEB continued the work of the FSA’s Financial Capability Division independently of the FSA and was later rebranded as the Money Advice Service.

Dodd-Frank Wall Street Reform and Consumer Protection Act (Dodd-Frank Act) (2010) - The U.S. Congress passed the Dodd-Frank Act, which created the Consumer Financial Protection Bureau (CFPB) to promote financial education, among other mandates, through its Consumer Engagement and Education group.

The Republic of Azerbaijan Launched a National Financial Literacy Program (2011) - The Republic of Azerbaijan launched a financial literacy initiative to promote financial education and protect the rights of consumers of financial services through financing from the State Secretariat for Economic Cooperation of Switzerland.

State Bank of Pakistan Launched National Financial Literacy Program (2011) - State Bank of Pakistan (SBP) launched a national financial literacy program to create financial awareness among the general public. The program was administered byS BP and Bearing Point Consultant and targeted about 50,000 beneficiaries with an emphasis on the low-income strata.

Financial Literacy in Sri Lanka (2011) - The Central Bank of Sri Lanka announced financial education initiatives designed to make citizens aware of facilities available in the financial sector and to promote financial inclusiveness among low income groups.

Training in Financial Literacy in Uganda (2012) - In Uganda, more than 600 business communities were trained in financial literacy and how to manage family businesses.

Interactive Financial Literacy Games in Guam (April 2012) - The Bank of Guam became the first bank in Guam to offer interactive financial literacy games that provide instruction in saving and investing for students.

The Republic of Georgia Hosted the 6th Annual Meeting of the EFSE (2012) - The Republic of Georgia hosted the 6th Annual Meeting of the European Fund for Southeast Europe (EFSE). Co-hosted by the National Bank of Georgia, the event focused on new loan agreements, the availability of financing to micro and small enterprises (MSEs), and the improved financial literacy of loan recipients.

MoneySENSE - Singapore Polytechnic Institute for Financial Literacy Singapore (2012) - Singapore bolstered its national financial education agenda with the launch of MoneySENSE - Singapore Polytechnic Institute for Financial Literacy Singapore (IFLS) by the Monetary Authority of Singapore, in partnership with Singapore Polytechnic.

Financial Literacy Campaign Launched in Namibia (2012) - The Financial Literacy Campaign was launched in Namibia in 2012, aimed at increasing financial education to small and medium entrepreneurs and low-income earners in the country.

Ben Bernanke Promulgates the Importance of Financial Literacy (2012) - U.S. Federal Reserve Chairman Ben Bernanke promulgated the importance of financial literacy and said that the next generation will be better off, as greater financial literacy would help support both individual and national economic health.

OECD and Russia’s G20 Presidency Issue Report on Advancing National Strategies for Financial Education (2013) - The Organization for Economic Co-operation and Development (OECD) and Russia’s G20 Presidency issued a report on Advancing National Strategies for Financial Education, detailing progress by the governments of the world’s major economies in implementing national strategies for improving financial education.

United Kingdom Moves to Make Financial Education Compulsory in all Schools (2013) - The UK’s Department for Education determined that financial education will become compulsory in all schools beginning in September 2014.

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