PERSONAL FINANCE ESSENTIAL:
FINANCIAL LITERACY FOR YOUNG EARNERS
The History of Financial Literacy
The Early Years of Financial Literacy
Financial literacy in America has a history as old as the country itself. Its early years, however, were entirely informal. Schools didn’t offer classes in personal finance, and professions that now provide financial literacy for adults didn’t exist.
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During that period, tips about money management might have come from parents, friends, or professional mentors. One of the earliest records of this type of personal finance education came in the year 1737. Benjamin Franklin was 31, and he had recently made a name for himself by writing and publishing an annual almanac. In that year’s edition, he wrote a column titled “Hints For Those That Would Be Rich.” In it, he signed off with a bit of financial advice: “A penny saved is two pence clear.”
Financial Literacy in the 19th Century
In the 19th century, financial literacy still lacked a venue for formal instruction. However, money management was just as important as it is today, and records show early attempts at financial education.
One example from the time period comes from overseas, with James Gilbart, a manager for London & County Bank. Gilbert moonlighted as a personal finance author, and in 1849, he published an article titled “Ten Minutes’ Advice about Keeping a Banker.” In it, he detailed the advantages of opening a bank account and explained the process for those who might be intimidated by it.
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Gilbart published extensively, writing for his fellow bankers as well as the general public. He believed that everyone—not just the rich—should have a bank account, and he strove to educate the public about banking and its benefits.
Financial Literacy in the 20th Century
In the 20th century, financial literacy was taught in an official way for the first time. For Lou Haverty, a Chartered Financial Analyst and creator of the finance commentary site Financial Analyst Insider, this development can be traced back to acts of Congress that established extension programs and provided funds for research.
“Personal finance as a serious educational topic only started in the 20th century,” he told OppU.
One act that had a significant impact on financial literacy education was the Smith-Lever Act of 1914. It created university programs that conducted research and taught the public “useful and practical information” about a range of topics, including personal finance.
However, in the 20th century, what is now called “financial literacy” was taught in courses of different names. These generally fell under the category of home economics, with courses that might have been titled “household finances,” “family finances,” or “consumer economics.” The basis for incorporating financial literacy into these courses originated at the University of Chicago, according to Alexander Lowry, a professor of finance at Gordon College.
“The earliest known research in personal finance was done in 1920 by Hazel Kyrk,” Lowry told OppU. “Her dissertation at University of Chicago laid the foundation of consumer economics and family economics. Margaret Reid, a professor of home economics, is recognized as one of the pioneers in the study of consumer behavior and household behavior.”
