Creating Financial Capability in the Next Generation: An Introduction to the Special Issue

The Great Recession revealed the financial vulnerability of millions of US households. In its aftermath, researchers and policymakers have turned their attention to improving the next generation’s knowledge of personal finance and its access to secure financial offerings (US Department of the Treasury 2014). Nearly all experts agree that such efforts should start early in children’s lives. Less clear, however, is the age or stage at which to start these processes, and no consensus has identified the programs and policies best suited to accomplish this important goal. This special issue of The Journal of Consumer Affairs, which we developed in collaboration with the Financial Literacy and Education Commission(FLEC), presents a collection of studies that explore starting early to develop financial capability. The concept of financial capability combines people’s ability to act with their opportunity to act in their best financial interests (Sherraden 2013, 3). It takes into account what people know and the skills they have to manage their financial affairs. And it also takes into account opportunities to improve their financial well-being. People need both—financial ability (i.e., knowledge and skills) and financial inclusion (i.e., safe and appropriate financial policies, products, and services)—to build financially secure and hopeful lives.

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