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From Financial Literacy to Financial Capability

This report documents the presentations and discussions of a colloquium which examined the concepts of financial literacy and financial capability and provides actionable steps for credit unions.

Executive Summary

Credit unions have long focused on financial literacy and capability as a key part of their mission. In many cases it has become the fulfillment of the original charge to “promote thrift.” But cultural changes around money management and the proliferation of educational tools and distribution channels mean that traditional methods may not be as effective. It’s essential that credit unions align their focus and their spending with ventures that strategically support the credit union mission. But it is equally important that efforts support effective service to members, promote good behavior, and simultaneously promote credit unions’ business goals.

What is the research about?

From Financial Literacy to Financial Capability,” the May 2012 colloquium held at the George Washington University School of Business in Washington, DC, zeroes in on this core truth: As organizations and as an industry, we can only be as successful as the sum total of our members. This report documents the presentations and discussions of the colloquium, which combined insights from academia and business. We examine the concepts of financial literacy and financial capability in further detail and provide actionable options for credit unions.

What are the credit union implications?

  • Annamaria Lusardi, set the stage with a comprehensive overview of both financial literacy and financial capability.
  • Ron Borzekowski, detailed CFPB’s research pipeline and answered questions about how the new bureau will measure progress in its mission to improve the nation’s financial capability.
  • Jean Chatzky, discussed how addressing habits and personal motivators can change financial behavior.
  • Lois Kitsch, reviewed how credit unions have spent countless hours and dollars to provide financial education opportunities for members and consumers across the nation.
  • Nick Maynard, posed and answered the question: Can vampire video games really improve retirement security?
  • Piyush Tantia and Alexandra Fiorillo, discussed how we can make financial literacy training more effective and go beyond financial literacy to help people make better financial decisions.

This report is sponsored by CO‑OP Financial Services and the National Credit Union Foundation.