Financial literacy has become increasingly important as the costs of everyday essentials rise alongside increasing inflation. Unfortunately, only about 57% of American adults are considered financially literate, with percentages trickling down by generation. Younger people are far less likely to have solid financial education, which only heightens recent trends surrounding financial insecurity. According to research and analysis published by the Board of Governors of the Federal Reserve System in May 2023, 27% of Americans were “just getting by” or “finding it difficult” to get by financially at the end of 2022. When asked about emergency expenses, 32% of respondents said they could not cover an expense costing $500 or more. While these trends of financial illiteracy and insecurity may be concerning, many resources are available to support consumers in building their financial education.
What is financial literacy?
The Consumer Financial Protection Bureau (CFPB) refers to financial literacy as having the knowledge, skills and behaviors needed to make decisions with money. If you are financially literate, you can make sound decisions when earning, budgeting, spending, saving, investing and borrowing money. Being financially literate can start small, but the knowledge builds and extends to more significant things such as credit scores, auto loans and mortgages. Without even basic financial knowledge, consumers can become subject to poor credit, bankruptcy, housing foreclosure or other negative consequences.
Understanding its importance, the United States Senate passed a resolution in 2004 designating April as the official Financial Literacy Month. Only a few months earlier, the Fair and Accurate Credit Transactions Act of 2003 established the Financial Literacy and Education Commission, whose purpose is to set “strategic direction for policy, education, practice, research and coordination so that all Americans make informed financial decisions.” Fourteen years later, in 2017, President Barrack Obama proclaimed April as National Financial Capability Month, supplementing financial literacy with the importance of consumers having access to trustworthy information to make decisions about their financial well-being.
The importance of a financial education
While Financial Literacy Month and National Financial Capability Month are celebrated in April, financial education is an essential tool that everyone should remain aware of all year round. Certain individuals, such as recipients of Social Security benefits, including Supplemental Security Income (SSI), Social Security Disability Insurance (SSDI) and Social Security Retirement benefits and others on fixed income sources, such as those on Medicare and Medicaid, who are prone to be the target of bad actors should pay particular attention to the information available to them. While managing benefits can seem overwhelming or confusing for individuals relying on them, knowing what is available as support can help mitigate any existing uneasiness.
Resources to support consumers
With the push against overconsumption at an all-time high, visibility surrounding programs and services to help with inflation has taken center stage. Part of financial literacy is highlighting resources available to consumers to help them ease the burden of rising costs.
The Lifeline Program provides a phone and internet service discount for qualifying low-income consumers. Administrated by the Federal Communications Commission (FCC), it offers up to a $9.25 monthly discount on service for eligible low-income consumers and up to $34.25 per month for consumers on Tribal lands. Eligibility is saved for low-income households based on income or good-standing enrollment in other programs such as Medicaid, Supplemental Nutrition Assistance Program (SNAP) or SSI.
The Weatherization Assistance Program (WAP) provides eligible, low-income households with full-scale home energy efficiency services. Funded by the U.S. Department of Energy, this provides weatherization services to help make homes more energy efficient. To be eligible for this program, you must be a state resident where you need assistance with your home energy costs. Preference is given to households with one or more disabled members, low-income families with children or households with persons 60 years or older.
The National Center on Health, Physical Activity and Disability (NCHPAD) is a public health practice and resource center on health promotion for people with disabilities. Although it does not provide financial support, founded in 1999, the NCHPAD works to create health equity by providing referral and consultation services through various web-based materials and health communication endeavors. Videos and articles provide resources to those with certain health conditions through state-by-state assistance, adaptive exercise videos, wellness resources and nutrition.
The Low Income Home Energy Assistance Program (LIHEAP) assists low-income households during an energy crisis, including those with a high home energy burden and with members who are elderly, disabled or have young children. LIHEAP is administered locally through the state, territory and Tribal land offices. The program is particularly important because it may help reduce health and safety risks that can arise when there is no adequate cooling or heating in the home.
Empowering yourself during Financial Literacy Month
Being aware and financially literate is not something that should only occur each year during Financial Literacy Month. It is important to prepare yourself for a situation should something happen and you suddenly lose income or face debt collection – resources to help protect yourself are available. For more information, we encourage you to take advantage of the resources provided by the CFPB and reach out to your local Social Security office for specific information on your individual benefits.
Nothing herein is considered legal advice. Nothing in this post is intended as advice or a suggestion to elect or not elect to claim benefits of any kind, including Social Security benefits, nor is it intended as financial advice in any way. The decision to claim benefits is a personal one that is contingent upon each individual’s unique circumstances.
