Financial capability refers to an individual’s capacity to make sound money management decisions that best fit their circumstances and manage financial resources effectively.
The overall goal of financial capability programs is to empower participants with the combination of knowledge, skills, attitudes and resources necessary to make informed financial decisions, use appropriate financial services, and practice and sustain positive financial management behaviors. While financial capacity programs aim to provide participants with education and knowledge to improve their financial literacy, the long-term outcome is for participants make sustained positive changes in financial management behaviors.
According to the Federal Reserve Bank of Boston, financial capability programs cover a wide range of subject matters to include, but not limited to:
- Money management techniques and savings strategies
- Improving and building credit
- Debt management and responsible borrowing and repayment
- Planning for the future
According to NeighborWorks America, financial capability programs offer both short-term and long-term benefits to participants.
- Short-term participant benefits include acquired knowledge of basic financial terms, concepts and practices that can lead to immediate new financial behaviors, such as opening a bank account.
- Longer-term participant benefits include increased confidence in financial management skills and sustained changes in financial management behaviors that can lead to financial stability, such as regularly setting aside money in a savings or retirement plan.
While financial capability programs may target adults, college students, or children, this section is designed for programs focused on serving adults.
Questions your program should answer:
- Are You Enrolling the Right People in Your Financial Capability Program?
- Is Your Financial Capability Program Structured to Meet Client Needs?
- Is Your Financial Capability Program Delivered by Competent and Qualified Facilitators?
- Are Clients Making Progress and Changing Financial Management Behaviors?