Report No. 1 of the Opportunity and Ownership Project. Financial services have become more free and accessible, but also increasingly complex. For new financial options to help most people, they must understand their options. Unfortunately, Americans have a weak grasp of basic finance. This paper emphasizes the importance of financial literacy and examines current financial education strategies. We explore two methods of financial education—broad financial curriculums and "teachable moments." After examining each, we suggest that a combination of the two perspectives, with the topics and strategies varying by target audience. We conclude by calling for a more rigorous evaluation of the effects of existing programs.

Even when incentives to save and invest are strong, many low- and moderate-income families lack the basic knowledge to manage their income wisely, build wealth, and avoid excessive debt. This brief examines financial literacy research and programs to improve financial knowledge and decision-making. While research suggests that existing programs do make a difference in financial behavior, data collection and policy concerns make financial literacy a fertile ground for further development as part of an asset-building agenda.