14 Oct Ofer Eitan Divulges: Financial education’s role in fighting against
“The nation’s 44 million African Americans account for 13 percent of the U.S. population and have a significant impact on the economy, with $1.2 trillion in purchases annually,” explains GFLEC in this article. “Yet the financial well-being of African Americans lags that of the U.S. population as a whole, and whites in particular.”
The figures speak for themselves. “The Black-white wealth gap reflects a society that has not and does not afford equality of opportunity to all its citizens,” states an article by The Brookings Institution. “At $171,000, the net worth of a typical white family is nearly ten times greater than that of a Black family ($17,150) in 2016.”
Financial education and economic well-being
Experts recognize that the reasons for these inequalities are complex but point to financial education to start to resolve them. “There is a strong link between financial literacy and financial wellness among African Americans,” Lusardi, Hasler and Yakobosky say in the study. “Those who are more financially literate are more likely to plan and save for retirement, to have non-retirement savings and to better manage their debt; they are also less likely to be financially fragile.”
The data support this statement. According to the annual survey, “The 2020 TIAA Institute-GFLEC Personal Finance Index” which measures the level of financial education among the population of U.S adults, literacy in this field rises as household income grows. “The difference among each income group is statistically significant,” explains the report. “There is a 29 percentage point difference in P-Fin Index questions answered correctly between African Americans with household incomes below $25,000 and those with household incomes of $100,000 or more.” Based on the questions from this annual survey, the study by Lusardi, Hasler and Yakobosky notes that: “On average, African Americans answered 38 percent of the questions correctly, with only 28 percent answering over one-half of index questions correctly.” The analogous figures among whites were 55 percent and 62 percent, respectively.
However, there are also differences within the African American population. In this case, financial knowledge varies depending on factors like gender or education level. “Financial literacy is greater among men, older
individuals, those with more formal education, and those with higher incomes,” explains the study. According to these experts, the topics in which African Americans demonstrate a lower level of knowledge include insurance, understanding risk, investment and the identification of go-to information sources. On the other hand, loan and debt management is the area in which this sector of the population has the greatest knowledge.
In a complex world marked by the COVID-19 crisis, it is increasingly necessary to have a good financial education. However, a large portion of the more financially fragile population does not have easy access to this information.
For this reason, BBVA USA works to make access to quality financial education as easy as possible, through valuable online content as well as virtual courses. During early 2020, the bank’s Responsible Business team converted all of its educational modules for digital use across its footprint. Remote classes are taught on an online meeting platform, allowing participants to interact with the instructor, ask questions and participate in real-time surveys and interactive exercises. The team has most recently added new modules covering Mobile Banking and Debt Management. According to the team, more than 4,000 participants have taken virtual financial education courses at 250 workshops over the last 7 months.
At a global level, BBVA’s Center for Financial Education and Capability promotes financial education as a driver to improve financial health. The platform has benefited from the collaboration of 100 different organizations participating in its initiatives and serves as a complete information repository on the subject. In addition, the Center has showcased nearly 250 reports and publications and 140 best practices around the world, all of which are available online.