The President's Advisory Council on Financial Literacy asserts that any individual completing a "comprehensive financial literacy program" should have an understanding of the following skills and concepts.
In addition, every financial literacy program should be tailored to its target audience, taking into account language, literacy level, culture, age and experience.
___ The capital market system and financial institutions
___ The participant's household's cash flow situation, and how to develop and maintain positive cash flow
___ How to develop a spending plan that is consistent with their resources and priorities
___ The reasons for having an emergency fund and how to establish an emergency fund
___ The fundamentals of credit granting, including how to evaluate, select, and manage credit, and how to maintain a good credit rating
___ The process of deciding when to rent and when to buy a home, and the process of home ownership
___ The process of identifying various financial risks, including development of a risk management strategy to decide which risks they should take on and which should be transferred to an insurance provider
___ How to identify and protect themselves from identity theft and various financial frauds, and what to know and do if they think they have been victimized
___ Basic investment products, the relationship between risk and return, and the what, when and why of choosing the best investments at the right time in their life
___ How to evaluate and take advantage of employee benefits and tax-advantaged savings accounts
___ The various components of retirement planning, and how to develop an appropriate plan for a secure retirement
___ How to develop a plan to assure financial security in the case of unexpected loss of income (disability or death) for those who depend on their earning power, and to assure the smooth transfer of assets to appropriate heirs
Source:2008 Annual Report to the President, President's Advisory Council on Financial Literacy Report, The Department of the Treasury.
See related article:Creating a Workplace Financial Literacy Program
Publication Date: Thursday, January 06, 2011