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.

Financial capabilities development: essential discourse in social work

“…The importance of financial literacy development as a social work activity has been highlighted in more recent works (see, e.g. Lein et al, 2015;McGarity, et al, 2018;Sherraden, 2017;Sherraden et al, 2016). While this paper offers some examples from the experiences of South African social workers, its argument is set within a global neoliberal context.…”

“…The third point of indebtedness is that of affective debt, which can be linked to the feeling of helplessness and despair which accompanies poverty; this can lead to dysfunctional intra-and interpersonal relationships (McGarity et al, 2018;Nash et al, 2005). Impaired judgement and well-being can result, which in turn hinders the ability of households to make financially smart decisions, retaining them in a cycle of debt behaviour.…”

“…Through the prioritisation of profit and economic logic, there has been a global regression in social welfare, opportunity and citizenship power. Instead, communities have become subject to the logic of the market (Pratt, 2006); the financial system has become the primary centre of redistributive activity through the outright promotion of debt incumbency (Harvey, 2005;McGarity et al, 2018). Within this context, communities have become increasingly vulnerable to economic shock and exploitation.…”

“…Financial literacy has long been recognised as a significant capability for impoverished households globally. However, within a neoliberal context, this has become ever more necessary for sustained livelihood and well-being (McGarity et al, 2018). Although financial literacy education has been taken up by several institutions and organisations, it can come with underlying agendas and motivations towards participation within the neoliberal financial environment.…”

“…This paper argues that there is a particular role for social work in the community-based provision of Financial Capabilities Development (FCD) for vulnerable households (Lein et al, 2015). This needs to become an essential part of a developmental social work discourse, particularly within a neoliberal environment (McGarity et al, 2018;Sherraden, 2017).…”