Keeping Up With... Financial Literacy

Financial LIteracy

This edition of Keeping Up With… was written by Adi Redzic.

 Adi Redzic is the Executive Director of iOme Challenge, an organization dedicated to being a voice for young people as they raise awareness about the social and economic impact of financial security in retirement. He also serves as Co-Chair of the 2014 ACRL President's Program focusing on Financial Literacy. Email Adi at and follow him on Twitter at @thinkchange and @iomechallenge. 


Financial literacy has become one of those buzz terms used by everyone, everywhere. Much has been said and written on the topic, too, but what exactly is financial literacy? According to various online sources[1], financial literacy is the ability to understand how money works. This refers to making decisions about personal finances and having the skills to make decisions that will have positive outcomes. It is widely agreed-upon that good money management skills are essential for a successful life. Yet, data shows that few of us make good financial decisions.  

In a recent FINRA Foundation's National Financial Capability Study[2], when asked five financial and economics questions, 61% of respondents answered 3 or fewer questions correctly. The same study reported that only 41% of people in the United States spend less than they earn, implying that they are the only ones able to save. 

And, 61% of respondents do not make comparisons when shopping for a new credit card, suggesting a major gap in applying good financial decisions.

Similarly, iOme Challenge's annual Measure of Millennials[3] reported in 2013 that 48% of Millennials, those born between 1982-2000, are very concerned with their financial situation and only 8% said they were not concerned at all. Half (50%) said they have monthly budgets that they follow, while only 45% pay their credit card bill in full each month. In terms of savings, 40% reported that they are saving on a regular basis.

So, What is Going On? 

What this data tells us is that there is a major gap in individual financial literacy and individual financial capability. For example, we may think saving is important, but we lack the knowledge and the behavior to make saving possible. 

One of my 'favorite' financial literacy stories is that of a bright, college-educated iOme staffer, who stumbled over a "compound interest" term during one of our meetings. He simply did not know what compound interest was, much less how to apply it. He isn't alone in this area: over 45% of college students majoring in business, political science, finance, and economics don't know this either. 

But the issue is not that he didn't know; the real issue is that he didn't ask. Even as we were discussing the topic, he did not feel comfortable to ask and would have probably walked away had it not been for another of our staff members, a financial planner, who observed his body language and quickly stepped in.

Why Does This Happen? 

There are a number of reasons to explain this, but let me give you the one I think is the most prominent: cultural norms. 

While we will gladly discuss Kim Kardashian's financial circumstances, we are generally very uncomfortable to talk about our own money, our financial woes, and our lack of financial education. As a result, we are often more likely to make bad decisions than to ask questions. Take for example the newly popularized College Cards--debit and prepaid cards issued by nonbank firms in partnership with universities that have been a target of a recent study by the U.S. Government Accountability Office (GAO).[4] Many students signed up for these cards with only several asking questions when presented with a variety of fees. Similarly, if we take a look at student loans, according to a 2013 report by the Consumer Financial Protection Bureau,[5] there are over 7 million borrowers who have defaulted on their loans leading us to wonder if they read and carefully considered their loan terms before signing, and if they understood the ramifications of a default, and/or sought other funding alternatives. 

When something is abstract and theoretical, it is always fun to ponder it and discuss with friends over a beer. However, when it comes to tangible change, it requires real work. And most of us are ashamed that we do not have the skills, the basic behavior, or the habits to do the necessary work. Often, we simply don't know how, we are ashamed to ask and as a result, we freeze, often ignoring the issues and hoping for an external solution. 

In a larger sense, our individual struggle to manage our money, to save for retirement, to offer quality retirement programs to our employees, to invest prudently, and to manage our loans wisely has and will continue to have even larger ramifications for the country as a whole. It is up to all of us, however, to assure that [we all, and especially our] younger generations have a secure financial future.

What Do We Do? 

We continue to act. We stop paying lip service to financial literacy and we work together to deliberately address this major gap in financial education in our country. Just like language literacy or information literacy, financial literacy education needs to become a commonplace. We are facing decades of cultural norms that have done little to enhance our financial capability, therefore we cannot stress enough the importance of this issue; talking about our money, asking for help, planning for the future, and making good decisions is essential for a long-term financial security and prosperity, both personal and collective. From basic budgeting and compound interest to retirement saving and understanding Social Security, these are all issues that affect our well-being - and the well-being of our society - and as champions of literacy, we ought to do more with financial literacy.

Of course, make no mistake, there are already many wonderful programs in place and much has been done thus far. However, the data shows that we need to do more. Sometimes this can be difficult to execute, I understand; especially as various campus departments compete for already scarce resources. But making sure that we work together to send off financially literate students into the world is the responsibility of an entire campus—from the President and Financial Aid Office to everyone else – including librarians! It just so happens that librarians are uniquely positioned to embrace this cause, to bring people together, and lead the charge by innovating, engaging, and creating.

With that said, if you plan on being in Las Vegas for the Annual ALA Conference in June 2014, don’t miss the ACRL President's Program on Financial Literacy (Saturday, June 28 from 10:30-Noon) featuring Michelle Singletary, nationally syndicated columnist and personal finance advisor at The Washington Post, and Dr. David Eisler, president of Ferriss State University. I also invite you to check out some of the resources below and find ways to bring financial education to your campus.


1. Several sources on how to define financial literacy:

2. FINRA Foundation’s U.S. Financial Capability Study

3. iOme Challenge’s 2013 Measure of Millennials

4. Article on GAO’s report on “college debit cards”

5. Consumer Financial Protection Bureau analysis of student loans

Select Resources

Take note that these are only a few resources available. There are many more out there, and the Resource and User Services Association (RUSA) is currently working on a comprehensive financial literacy education guide and best practices specifically designed for libraries. Stay tuned.

360 Degrees of Financial Literacy


Consumer Financial Protection Bureau

Credit Karma

iOme Challenge

Jump$tart Coalition


Smart Money Week

St. Louis Fed Personal Finance Education Resources

Finally, visit the ACRL President’s Program page, which includes a list of Financial Literacy Best Practices from across the country. If yours is not listed, please share it with us!