Financial Literacy and Social Work

Abstract

In the second edition of Handbook of Consumer Finance Research, Margaret Sherraden, Jodi Jacobson Frey, and Julie Birkenmaier (Sherraden, et al. 2016, cited under Introductory Work) refer to financial literacy as the effective use of financial skills and knowledge to manage financial resources in a way that maximizes lifelong financial security. Resources normally include personal budgets, checking accounts, savings accounts, credit cards, personal loans, simple insurance products, and retirement plans. As explored in Sherraden’s entry on “Financial Capability” in the Encyclopedia of Social Work (Sherraden 2017, cited under Introductory Work), the need for financial literacy among the general population is becoming an increasingly essential function in response to the current trend toward increased financialization globally. As financial institutions and markets continue to increase in size and influence, individuals without financial skills and knowledge to navigate these systems become economically vulnerable. Many academic fields, including accounting, economics, and public policy, have focused on financial literacy as an intervention for poverty. The field of social work, however, offers a unique contribution to this subject area by positioning financial literacy within the larger system of financial capability. In “Financial Capability and Asset Building for All” (Sherraden, et al. 2015, cited under Introductory Work), Sherraden and colleagues define financial capability as the combined effects of financial literacy (i.e., the ability) with financial inclusion (i.e., the opportunity). Increasing both financial ability and opportunity is needed to increase one’s financial well-being. Currently, work related to financial social work takes many forms. Direct practitioners often help assess the financial well-being of clients, teach clients financial skills, help enroll participants into asset-building programs, and assist individuals to create spending plans. Complementing our micropractice work, mezzo and macro social workers promote high-quality community financial services, push for increased financial inclusion, and work to eliminate inequitable community financial practices through advocacy policy interventions.