Financial Literacy as an Economic Development Tool
Posted on by Sadie Colcord
CERC’s Municipal Services and Research teams are currently working with the Town of Windham to put together a plan for starting a financial literacy center. While we are not yet sure what it will look like, I have been doing research on best practices from around the country, and all the evidence shows that financial literacy incredibly important for strong economic and community development.
When individuals are not financially literate, they often do not sufficiently plan for retirement, have fewer assets and higher debt, use more expensive financial services, and participate in the stock market less frequently. Most notably, higher debt leads to decreased ability to spend, which, in turn, leads to a slower rate of asset accumulation. Plus, a lack of funds during retirement due to insufficient planning and limited stock market participation leads to diminished purchasing power in old age. All of this negatively impacts the economy at the local, state, national, and even global levels.
Financial Literacy to Boost Local Economies
In my research on best practices, I have come across examples from all over the country designed to increase financial literacy for the most vulnerable populations in our society and boost local economies. Often, these types of programs target children to prevent them from falling into a cycle of debt as adults. Many of the courses teach them about budgeting and saving in a hands-on way. In one example, a group a students in Jacksonville, Florida spends a half-day sitting in a course on budgeting and then visits a local farmer’s market with a $5 voucher to be used to contribute to a group fruit salad. Thus, the class must work together to budget properly to make enough fruit salad for each classmate.
Another group that often receives financial literacy services is immigrants and non-native English speakers. For individuals unfamiliar with the customs or language in this country, financial literacy is even more challenging. They may not know what the best resources are to support them, so these courses are essential for making these connections. Financial literacy centers often offer courses in other languages as a way of making these groups feel more comfortable.
Community Financial Wellbeing
Financial literacy programs are also often tied in with other related social and economic support services such as career counseling, housing services, and healthy eating workshops to provide more holistic support for individuals and families in need. Overall social and financial wellbeing are very important for economic growth within a community. As people become more self-sustaining, they can contribute to the local economy in more significant ways.
If you think that a financial literacy center would benefit your community’s economy, reach out to CERC to see how we might be able to help you plan for it.