By Jessica McCann, Aaliyah Moore, Tonantzin Juarez, April Joy Damian
Financial literacy, defined as understanding and applying various practical financial skills such as management, budgeting, and investing, is a critical determinant of health outcomes. Financial literacy is closely tied to health, as it can determine an individual’s understanding of health-related financial information and empower marginalized communities to navigate complex health care systems. This is important, as a majority of Americans report feeling completely lost regarding the U.S. health care system. Moreover, 22 million (1 in 12) Americans have medical debt totaling approximately $220 billion, and people with disabilities or in worse health, those with lower incomes, and the uninsured are more likely to be affected. While it is well documented that low financial literacy is associated with poorer health outcomes and reduced quality of life, financial literacy curricula, when available, often give limited attention to the health-related aspects of financial literacy.
Financial Literacy as a Social Determinant of Health
Low levels of financial literacy are deeply intertwined with other critical determinants of health. These include (1) food insecurity, marked by insufficient access to affordable and nutritious food; (2) delayed care caused by poor budgeting and financial constraints; (3) increased community violence resulting from limited economic opportunities and resources; (4) chronic stress and mental health challenges triggered by financial instability; and (5) housing insecurity shaped by unaffordable or unstable housing conditions. These interconnected challenges associated with low financial literacy greatly influence an individual’s health and illustrate how financial management skills can profoundly influence health outcomes. Strengthening financial literacy by teaching practical budgeting skills and informed decision-making strategies equips individuals and communities to better handle these interconnected challenges.
Current Policies and Recommendations
Federal and State Policies
Despite the proven importance of financial literacy and its intersection with health, few policies effectively promote financial literacy among the most vulnerable populations. At the federal level, the Fair and Accurate Credit Transactions Act of 2003 established the Financial Literacy and Education Commission, which delivers financial literacy training through a website and training programs affiliated with higher education, youth employers, and financial institutions. Additionally, the Department of Labor offers several online resources for youth and adults. While these nationwide programs bring value to educated and/or employed individuals, they may miss others.
At the state level, 35 states require students to take a financial literacy course in high school. Yet, curricula vary wildly and, in practice, may not be effective. For example, Ohio only requires one half of one credit in financial literacy for high school graduation, and the curriculum does not address health-related financial literacy. Even states that require more extensive financial literacy courses face barriers like a lack of qualified teachers, budget constraints, and outdated or impractical curricula. School-based programs may not reach children in vulnerable communities or those who do not follow traditional graduation pathways. Up to one in seven high school diplomas are granted through General Education Development (GED) tests, meaning these graduates, who are among those most at-risk, are not required to meet various graduation standards such as financial literacy training.
Recommendations for Reaching Vulnerable Populations
While school- or work-based resources may be helpful for some, those most in need of financial education may fall through the cracks. The following recommendations can increase the accessibility of financial literacy programs and improve knowledge of health-related financial literacy.
Creative state-level policies: Outside school settings, states have implemented non-traditional programs, such as Arizona’s initiative providing financial literacy training to public assistance recipients. More states should replicate these programs using creative funding mechanisms like human services or education dollars.
Innovative partnerships: Collaborations between schools, community organizations, and financial institutions are also working to fill gaps. In Vermont, M&T Bank partnered with the Network Against Domestic and Sexual Violence to fund credit building, budgeting, and housing security training for abuse survivors. Several organizations are devoted to facilitating or funding these partnerships including the National Endowment for Financial Education and Operation Hope.
Community-based programs: Programs planned and implemented by community members are making strides, with the added bonus of population-tailored curricula that reach those who most need financial literacy training. At El Sol Neighborhood Educational Center in Southern California, community health workers teach peers about important financial literacy topics such as predatory payday lending with the ultimate goal of increased home ownership, improved health outcomes, and reduced recidivism. Communities should explore options, model programs, and available funding. Sources for inspiration, such as outreach ideas and online resources, include the U.S. Financial Literacy and Education Commission and the Cities for Financial Empowerment Fund.
Incorporating health financial literacy in the safety net clinic setting: Recent data like KFF’s Burden of Medical Debt in the U.S. tracker reflect the need for consumer competency in medical billing and insurance coverage, from selecting suitable insurance plans to understanding out-of-pocket costs to prevent unexpected debt and costly emergencies. Adequate financial literacy about health care improves decision-making and ensures access to affordable care through effectively interpreting medical information. Programs similar to El Sol’s model can be adapted to clinical settings by expanding health center enabling services to include health-related financial literacy, and empowering patients to handle more of their own finances.
Expanding research to understand the intersection of health and financial literacy:
In order to better understand the needs of populations served, more research is needed that addresses health literacy and financial literacy as intersecting issues that disproportionately affect populations already at risk of poor physical, mental, and financial health.
Closing
Prioritizing financial literacy education for marginalized communities can lead to a transformative ripple effect that improves economic and health outcomes throughout communities. Equipping lower income populations with practical financial skills provides the necessary tools to manage money responsibly, make informed health care choices, and advocate for themselves in medical and financial contexts. Communities with higher financial literacy are healthier, less likely to experience crime, and more stable. This is one step toward a healthier, financially secure future and more positive health outcomes for families and communities.