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The Inclusive Economy

What Financial Capability Means at Every Age

By Kate Griffin on 04/01/2016 @ 10:00 AM

Tags: Financial Capability

It's our favorite time of year here at CFED: National Financial Capability Month! Every April, we get to celebrate the work we do together and shed light on all the ways the organizations and agencies we work with are empowering people to build better financial lives.

Last year, we kicked off Financial Capability Month by sharing our belief that every individual — given the right skills and access to the right resources — has the capacity to succeed and build financial security. We also discussed how each financial decision becomes practice for the next, and the next after that.

But the story of financial capability comes back to one simple thing: what’s going on in your life? What are you worried about, dreaming about, planning for? That’s the lynchpin upon which you will make financial decisions. Across the lifecycle, there are multiple times and ways in which we are primed to look around us — for advice, for products, for a hand — before we make a decision that impacts us financially. We’re calling this the “Financial Capability Lifecycle.”

To paint a picture of how financial capability develops, we’ve looked at three types of lifecycle events:

  • Universal experiences: things that happen to everyone, like early childhood and middle school
  • Expected or recurring experiences: things that happen for many of us, but at different points in life, like having kids, getting a job, paying taxes and finding a place to live
  • The unexpected: things that may or may not happen, but if they do there is a financial impact, like losing a job, getting very sick or caring for aging family members

From there, we looked at why each of these represents an opportunity to introduce a financial capability service and what the goal might be in each of those moments. For example, when we work with people who are getting ready for their first job, they are primed to be making key financial decisions, such as where to deposit the paycheck, what benefits to take advantage of and how to allocate their income. These decisions are critical not only for how they affect today’s financial capability, but for their downstream impacts as well – how they affect a person’s long-term financial well-being. The lifecycle framework then goes on to explore the types of products and services we might put into place and the delivery channels we might use to ensure that someone in that lifecycle moment is set up for success.

Help us complete the Financial Capability Lifecycle

We’re releasing this today as a prototype, and we’re hoping you can help us refine it. We’d love to hear from you…

  • Is the Financial Capability Lifecycle useful to your work? If so, what about it is helpful?
  • What could we do to make the lifecycle prototype more helpful to your work?
  • What lifecycle moments are missing from this prototype? What further details would you add?

We built this Financial Capability Lifecycle after spending the last 18 months touring the country, talking with many of you about how to integrate financial capability services into their existing programs. We've worked with state and national associations on how their networks can do this. We've even written an insightful book on the topic (which was just released as an e-book!). But we don’t want this dialogue to end here – it’s too important to us. Please send us your ideas and comments!

And continue to join in all this month for an exciting celebration of Financial Capability Month, and join the dialogue on Twitter at #FinCapWorks! We’ll be highlighting lessons learned from financial capability work across the country, discussing the journey from financial literacy to financial well-being and highlighting the important role of the community tax prep field as the 2016 tax season winds down.

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