Bridging the financial literacy gap for a better future

Nestled in the heartland of America, Iowa is often known for its resilience and tight-knit communities. However, amid the cornfields and small towns, a quiet issue persists. Many Iowans are struggling with inadequate financial literacy and the knowledge to prepare themselves for economic success.

According to the 2022 Annual Financial Health Pulse Report from the Financial Health Network, more than two-thirds of Americans are still not financially healthy, and significant disparities have worsened across gender, race and income levels. In fact, the measure of financial literacy has fallen 19 percent over the past decade and this gap is estimated to have cost Americans more than $415 billion.

April is Financial Literacy Month, which gives us a chance to address this issue head-on. We must work together to focus our efforts on empowering Iowans to overcome financial hurdles and bridging the gap. As the executive director of the Iowa Credit Union Foundation (ICUF), I am passionate about understanding the needs and realities of Iowans. ICUF is on a mission to champion financial well-being for all.

For these reasons and more, ICUF commissioned a report last year titled “The Economic Realities of Communities of Color in Iowa” to identify barriers to financial well-being within communities across the state and identify opportunities for collaborative solutions among relevant stakeholders.

In the report, key education findings showed that high school dropout rates are higher among racial and ethnic minorities when compared with white students. While education does not necessarily indicate wealth, educational attainment can serve as a strong indicator of an individual’s likelihood to secure stable employment and confidently make smart financial decisions.

Knowledge is the cornerstone of progress, and financial education is no exception. Without it, it can lead to a host of real-life consequences that can include high loan and credit card interest, overdrafts and identity theft. Integrating financial literacy programs into schools and workplaces can equip Iowans with the skills needed to navigate the complexities of the modern financial landscape.

That’s why ICUF is four years into a five-year $50,000 pledge to the University of Northern Iowa School of Business and their Financial Skills for Smart Living Program. With this partnership, UNI continues education programming for educators, advancing their knowledge to teach financial literacy curriculum in Iowa high schools. Since its inception the program has been administered in 113 schools with 153 trained teachers serving 12,000+ students.

Financial literacy is more than balancing a checkbook; it is a tool for empowerment and a catalyst for economic stability. Teaching Iowans the principles of budgeting, saving and investing is crucial for breaking the cycle of financial insecurity. At ICUF, we work with Iowa credit unions to host our annual Financial Coach Program. With more than 200 coaches in 50 credit unions across Iowa in the last five years, the program gives employees the tools and knowledge to promote financial literacy for members of all ages and make a difference in supporting the financial well-being of Iowa credit union members.

Addressing the financial literacy gap also requires a collaborative effort. Local government, educational institutions, financial institutions and community organizations must join forces to create a comprehensive strategy. By pooling resources and expertise, we can develop targeted initiatives that meet the unique needs of diverse communities across the state.

For example, ICUF has partnered with the Iowa Coalition Against Domestic Violence (ICADV) for the past 12 years to provide a match savings program for survivors of domestic violence. The goal of this program is to empower participants to build relationships with their credit union and promote financial independence. Upon completion of the class, participants open a savings account and once they reach the savings threshold, their funds are matched by ICUF. More than $150,000 has been matched to 280+ survivors since 2012.

Additionally, ICUF also partners with Proteus, Inc. in support of the Proteus Financial Literacy Program, which helps Hispanic farmworkers make informed decisions about their finances, improve their financial health and build wealth so they can achieve their dreams. Collaboration and partnerships allow us to lay the groundwork for a more resilient and economically empowered Iowa.

As we envision a brighter future for Iowa, let’s not forget the importance of financial literacy in shaping the path for our local communities. It’s time for us to empower Iowans and build a legacy of financial strength that will endure for generations to come. While this will not be resolved overnight, understanding the barriers faced by our communities drives my belief in the need to work together toward greater financial inclusion for all Iowans. We hope you will join us in this mission.

Ena Babic Barnes is executive director of the Iowa Credit Union Foundation.