Content Strategy for Financial Literacy

Did you know only five US states require a personal finance class for high school graduation? I remember being in high school. I complained to my parents that I was expected to learn calculus, but no one had ever taught me to balance a checkbook*. My parents were expected to teach me, but their own finances were a bit jumbled.

We need to teach financial literacy. And we can use content strategy for financial literacy.

What is Financial Literacy

Financial literacy is a “the ability to use knowledge and skills to manage financial resources effectively for a lifetime of financial well-being.” This is the definition from the 2008 President’s Advisory Council on Financial Literacy. Yet only 2/3rds of Americans can pass a basic financial literacy test.

Most people agree that there are five areas of knowledge people need to understand:

  • How to budget
  • How interest works
  • Debt (the good and the bad)
  • How to gain credit
  • Identity theft and security

These are also sometimes grouped into three categories:

  • Spending wisely
  • Saving appropriately
  • Investing safely

The idea is that this covers the basics. With this knowledge people can save for retirement, pay their bills, manage their expenses, and plan ahead.

Why Does it Matter?

While there are many causes of bankruptcy, they all come down to one basic thing: not having money. Does that sound like a tautology? It’s not. Here are the five top causes of bankruptcy:

  1. Medical expenses
  2. Loss of job
  3. Overuse of credit cards
  4. Divorce
  5. Emergency expenses

Think through each situation. An unexpected expense comes up, and the person doesn’t have savings. Maybe they don’t have savings because they never learned how to set aside money. Or maybe they can’t save money because their day-to-day expenses are too high.**

If you understand how to budget and save, you can plan ahead for potential emergencies or unexpected expenses.

How Do We Measure Financial Literacy?

There are many opinions on how we can rate a person’s understanding of money matters. For example, Dave Ramsey of Ramsey Solutions says:

“Financially literate people know their way around a budget, know how to use sinking funds, and can tell you the difference between a 401(k) and 529.”

Does that mean that a person who knows how to use sinking funds has financial literacy? What about someone who checks their bank account regularly and uses credit cards wisely, but has never heard of sinking funds?

The Global Financial Literacy Excellence Center (GFLEC) asks three questions to evaluate financial literacy:

  1. Suppose you had $100 in a savings account and the interest rate was 2 percent per year. After 5 years, how much do you think you would have in the account if you left the money to grow?  Answer choices:  more, less, or exactly $102.
  2. Imagine that the interest rate on your savings account was 1 percent per year and inflation was 2 percent per year. After 1 year, how much would you be able to buy with the money in this account?  Answer choices:  more, less, or the same as today.
  3. Do you think that the following statement is true or false? “Buying a single company stock usually provides a safer return than a stock mutual fund.”

To me, this sounds quite advanced.

Start with the Basics: Vocabulary

Financial literacy requires a new vocab. We have so many terms that we need to define. AML, ACH, APM, CNP, EFT, KBA, routing number, compound interest, certificate of deposit, overdraft…

And these terms often appear without context! We need to create financial experiences that guide people. You don’t need to know what an EFT is to safely and intelligently use an Electronic Funds Transfer. And you don’t need to know the term “overdraft” to learn how to keep your balance high enough to not need to pay an overdraft fee.

Content Strategy for Financial Literacy

We have three ways we can use content strategy for financial literacy.

  1. Guide consumers so they can take action without information
  2. Educate consumers when they take action
  3. Make it easier to learn about financial literacy

Consider this: content strategy is how we get the right content to the right place in the right time. Thus, content strategy for financial literacy means getting educational information to people who need it, when they need it. It’s about explaining what an EFT is in context, and offering options to avoid overdraft fees in the future.

Content strategy for financial literacy means guiding someone through the steps to make a wire transfer even if they don’t know the term, showing them the options for autopay and autosave when they need it, and offering videos to make it easier to set up a budget.

We have power, in our words. We can use content strategy for financial literacy and empower consumers.


*It was the 90s. I’m not suggesting balancing a checkbook is a good use of time today.

**I’m not ignoring the issues of income inequality. Some people can’t save money because they aren’t paid enough. Unfortunately, I don’t think we can solve that with better health literacy. But perhaps better understanding of finances can encourage more people to vote in their best interests.

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