It’s no secret that we’re facing a financial literacy crisis, and it’s proving to be an uphill battle. Despite the increased emphasis on financial education over the past few years, including more businesses adopting financial literacy programs, the truth is that we’ve barely moved the needle. 

In fact, overall U.S. financial literacy rates have been slowly getting worse since 2020, dropping again this year to only 48% — the lowest it’s been since 2017. Moreover, the segment of adults with alarmingly low levels of financial literacy has been gradually rising, with 25% of American adults unable to answer even a quarter of basic financial literacy questions correctly. 

So what’s going wrong? If our focus on and investment in financial literacy programs is increasing, why is financial literacy not only failing to meaningfully improve but actually getting worse?

While external factors like the pandemic, banking crisis, or imminent recession certainly have an effect, it’s critical to analyze the education itself too. Given the time and money invested into these programs, not to mention their impact on consumers, it’s mission-critical to ensure they’re effective. 

We think they’re not. 

Here’s why — and what we can change:

Financial education programs are often inaccessible and inequitable

Despite businesses and financial institutions striving to fill the gaps left by our education system’s disjointed approach to financial literacy, their programs can often face the same issues of access and equity. Just like the variance in state-by-state personal finance curricula, people at different institutions may receive different depths and breadth of education.

Moreover, many people can fall through the cracks if they don’t have a relationship with a particular organization that offers financial education, which often disproportionately affects minority and underbanked communities that arguably have the greatest need for financial literacy resources. 

Traditional education tactics themselves can be inaccessible, too. For example, in-person sessions exclude people who cannot physically come to learn. Even computer-based programs pose challenges by limiting the circumstances in which people can learn to only when they have access to a computer and wifi. 

With over 85% of American adults owning smartphones (and 98% of Gen Z), mobile-optimized programs make education more accessible to more people, regardless of their background. They can also improve knowledge retention by giving people the opportunity to continue reinforcing their learning anytime, anywhere. 

Financial education fails to leverage learning science 

Financial topics can be complicated and jargon-laden, so it’s not surprising that it’s a challenging subject for many. What is surprising is that many financial education programs don’t take advantage of established learning science strategies to mitigate these challenges. 

For example, consider the challenge of decreasing attention spans. Dense, text-heavy resources like PowerPoints and textbooks are unlikely to effectively break through Millennials’ 12-second attention span or Gen Z’s measly 8-seconds. But that doesn’t mean these generations are a lost cause — it means we need to adapt the education delivery. Mobile-first education helps, but the real key is microlearning. Bite-sized content is more likely to break through short attention spans and effectively break down complicated concepts to yield long-term learning. 

Given the paltry financial literacy rates, financial education programs should also leverage the testing effect to ensure their offerings are effective. Instead of just providing raw educational content, implementing a mechanism for people to test and reinforce their learnings is fundamental for knowledge retention.

So, what now?

It may be disheartening to see the recent drop in financial literacy rates, but hope is not lost. This isn’t cause to abandon our financial wellness programs, but rather a signal to adjust them. To meaningfully improve our collective financial literacy and wellness, leaders in business and finance must step up to ensure equitable access to financial education.

Join us in revolutionizing financial education by connecting with us.