From financial literacy to financial capability among youth

Youth in the United States are facing an increasingly complex and perilous financial world. Economically disadvantaged youth, in particular, lack financial knowledge and access to mainstream financial institutions. Despite growing interest in youth financial literacy, we have not seen comparable efforts to improve access to financial policies and services, especially among disadvantaged youth. Instead of aiming for financial literacy, an approach widely promoted in the United States, we suggest aiming for financial capability, a concept grounded in the writing of Amartya Sen and Martha Nussbaum. Building on research in the United Kingdom, the paper proposes that financial capability results when individuals develop financial knowledge and skills, but also gain access to financial policies, instruments, and services. The paper addresses theoretical and pedagogical approaches to increasing financial capability, followed by examples of programs in the United States. In the conclusion, we discuss implications for policy, practice, and research.