It’s a given that improving the financial knowledge of a larger segment of the population is critical to getting more Americans to participate in their own financial planning. But increased financial literacy and education is only a part of the solution for greater financial empowerment, says Joshua Sledge, director at the Center for Financial Services Innovation (CFSI).
What’s even more important, he says, is changing peoples’ financial behavior, particularly those in the lower income segments of society, because even with greater access to financial knowledge, old habits – putting off paying down debt, not saving properly, living from paycheck to paycheck, to name a few – can sometimes die hard.
“Just because you have the knowledge doesn’t mean you always do what’s right,” Sledge says. “What we need to do is improve financial capability, to provide information, products and tools that can not only help people learn about the importance of financial planning, but help them change their behavior by putting their knowledge to work.”
Since 2010, CFSI has been working closely with partners like the Citi Foundation, Charles Schwab and Bank of America, among others, to support initiatives designed to result in behavioral shifts that will enable a greater number of Americans to properly plan their finances.
One of the organization’s major undertakings is the $400 million Financial Capability Innovation Fund, which invests in grassroots organizations that are making a difference in the financial lives of middle- and low-income groups across the nation by increasing their financial capabilities in different ways.
The innovative efforts of these groups – the Financial Capability Innovation Fund has invested in 13 ventures — are resulting in the kind of behavioral changes that are required to bring about greater financial health and well being for more Americans, Sledge says.