In today’s rapidly evolving financial landscape, financial education is a critical necessity. Financially educated consumers have higher financial capability, more disposable income, and higher credit scores. The U.S. Department of the Treasury’s National Strategy for Financial Inclusion (NSFI) outlines a comprehensive roadmap to expanding access to financial products and services for all Americans. For the private sector, this strategy presents a clear opportunity to address the financial literacy gap while strengthening their communities and customer base. With the rise of digital education technology, it’s easier than ever for financial institutions and employers to provide high-quality financial education resources optimized for employees, customers, students, and communities. 

The Importance of Financial Education

Statistics show that financial literacy is alarmingly low among Americans. Only 57% of adults in the U.S. are considered financially literate. This lack of financial knowledge has significant consequences, with the cost of poor financial literacy estimated at $388 billion in 2023. Understanding financial concepts is not just about managing money but about comprehending the broader economic context and making informed decisions. This comprehensive approach to financial education is crucial for building a financially resilient society. 

Promoting Access to Transaction Accounts That Meet Customer Needs

American consumers should have reliable access to transaction accounts to safely manage their finances. In 2023, 5.6 million U.S. households were unbanked. Improving the accessibility of transaction accounts and building trust with communities can help bring this number down, especially in historically underserved communities. The NSFI’s first objective is especially critical for underbanked communities, where trust in financial institutions may be low. The private sector, especially financial institutions can help by: 

• Building Trust Through Community Engagement: Financial institutions can foster trust with underbanked communities by giving back through initiatives like sponsoring financial education programs for K-12 students, offering just-in-time education for adults, and holding community financial education events or workshops. 

• Providing Relevant Resources: By delivering accessible and inclusive education, banks and credit unions can help communities understand the value of transaction accounts and how to use them effectively. 

Increasing Access to Safe and Affordable Credit

Americans’ total credit card balance was $1.166 trillion in the third quarter of 2024, according to the latest consumer debt data from the Federal Reserve Bank of New York. That’s up from $1.142 trillion in the second quarter of 2024 and is the highest balance since the New York Fed began tracking in 1999. While access to credit is vital for financial mobility, it must also be safe, affordable, and accompanied by education. Many individuals are unaware of how credit works or why it’s important, creating costly barriers to financial inclusion. The private sector can help by: 

• Educating on Credit Fundamentals: Financial institutions can sponsor financial education programs that can teach K-12 students essential skills while employers can provide tools that educate their workforce on improved debt management and repayment strategies.  

• Promoting Responsible Credit Use: Financial institutions should collaborate with consumer reporting and government agencies to integrate data into credit scoring and credit underwriting models which can open safer and more affordable credit opportunities for those who currently have limited or no credit history. 

Expanding Access to Savings and Investments

The NSFI underscores the importance of helping individuals build savings and explore investment opportunities. Savings, in particular, play a critical role in long-term financial security and upward mobility. The private sector can help by: 

• Encouraging Student Savings: Data shows that students who have savings are over three times more likely to enroll in college than a student with no savings account. Financial institutions can support this by offering youth savings programs, scholarships, and providing financial literacy courses that emphasize the importance of saving early. 

• Promoting Investment Literacy: Employers and financial institutions can utilize investment education tools to teach employees and customers how to start building wealth through accessible investment options. 

The Role of Parents in Financial Literacy

Engaging parents in financial education creates a ripple effect of positive outcomes for families, communities, and businesses. Research shows that while 53% of U.S. 15-year-olds frequently discuss money with their parents, only 24% discuss broader economic topics, highlighting an opportunity to deepen these conversations. With 26 states now mandating personal finance education, students are becoming catalysts for bridging generational gaps in financial literacy, creating a cycle of empowerment where financial skills are passed down and strengthened over time. Financially literate families make better decisions, build financial security, and even benefit the private sector by increasing consumer financial capability, disposable income, and credit scores. By leveraging technology and education programs, businesses and communities can work together to create a more financially informed society, where everyone has the tools to achieve financial well-being. 

Aligning Private Sector Efforts with National Financial Literacy Goals

The National Strategy for Financial Inclusion provides a powerful framework for addressing the financial literacy gap in the U.S. The private sector can align its efforts with the objectives outlined the report to drive meaningful change in financial education while supporting overall business goals. By engaging with K-12 schools, employers, parents and the community, we can create a more financially literate society, where everyone has the tools they need to achieve financial well-being. Financial literacy should be a national priority, and by working together, we can ensure that all Americans have the knowledge and skills they need to succeed financially.