Financial literacy underpins the economic decisions we make every day. Good financial literacy allows individuals to deal with all aspects of money confidently and effectively. Furthermore, for professionals and organisations across industry sectors, strong financial literacy skills are fundamental to growth and success.
Achieving financial literacy requires the building of core skills and knowledge, and a commitment to Continuing Professional Development (CPD) can help develop these essential financial skills. This article will explore what financial literacy is and identify ways CPD participation can help improve financial literacy.
What is Financial Literacy?
Financial literacy is having the knowledge and skills to make informed decisions in relation to money - including areas such as spending, saving, and investing. Being financially literate is vital for individuals to maintain their long-term financial health. A lack of financial literacy can create vulnerability, especially in the face of additional pressures such as rising living costs or pension systems for individuals in retirement. For organisations, financial literacy is crucial for navigating complex marketplaces and meeting the financial obligations fundamental to success.
The Organisation for Economic Co-operation and Development (OECD) defines financial literacy as: “knowledge and understanding of financial concepts and risks, as well as the skills and attitudes to apply such knowledge and understanding in order to make effective decisions across a range of financial contexts, to improve the financial wellbeing of individuals and society, and to enable participation in economic life” 2
Despite its importance both personally and professionally, research has highlighted that only a third of the world’s adult population can be considered financially literate1. This reveals a critical knowledge gap that CPD can help close.
What are the key areas of Financial Literacy?
Below are four key areas that can be identified as forming the basis for financial literacy. Understanding in these areas is essential for participating meaningfully and effectively in economic matters:
- Earn – Understanding income and how to earn it and increase money-making potential.
- Save and invest – Learning about investments and the potential ways of growing money for the future.
- Protect – Learning to prepare for financial emergencies. This can include investing in insurance or saving money to use in the event of unexpected costs.
- Borrowing and managing debt – Learning to manage loans such as mortgages wisely, to ensure financial growth and wellbeing whilst avoiding unnecessary debt and keeping a good credit score.
Who can benefit from CPD in Financial Literacy?
CPD is not only helpful for individual interests, but engaging in financial CPD can be of value to professionals across industry sectors. The following are some simple examples of how CPD can improve financial literacy in a professional context:
- Educator: Specialised CPD helps teachers gain confidence to deliver financial education within the school curriculum. For senior leaders, financial CPD can help build skills in managing school and organisation budgets.
- Employee: Financial education empowers employees to have confidence and take control over their financial future, including retirement planning. Relevant CPD learning in finance can also allow employees to bring valuable transferable skills to the workplace.
- Management: CPD participation can help organisation management keep up to date with evolving financial legislations and tax laws. It also helps adapt to emerging market challenges. Relevant financial CPD can benefit management across contexts, from small businesses to large multi-nationals.
How can CPD help with Financial Literacy skills?
CPD stands for Continuing Professional Development and describes the learning activities individuals engage in to enhance their abilities and knowledge. At its core, CPD is a commitment to ongoing lifelong learning. It encourages individuals to identify opportunities to learn something new, refresh existing knowledge, improve skills, or keep up to date with the latest developments in a particular industry. CPD combines different methodologies to learning, such as training courses, seminars, workshops, conferences and events, webinars and online eLearning programs.
In the context of financial literacy, CPD learning offers multiple ways to improve financial skills and can benefit individuals personally, professionally and at all stages of their career. CPD engagement can range from learning to understand basic personal finances, to gaining accountancy knowledge, building skills in stock investment or developing advanced financial management. In addition, as CPD encourages ongoing learning rather than a ‘one off’ approach, individuals can consistently work on developing their skills as economic circumstances change or they are presented with new financial challenges in a professional context.
Active CPD also encourages staying up to date and embracing change. This can be beneficial as financial regulations change, or new products enter the market. For example, more complex financial instruments such as cryptocurrency are becoming increasingly common. CPD in this area can help adapt to these new opportunities with confidence. OECD research suggests a lack of knowledge in these contemporary fields can create more risk, if not managed properly3.
Effective CPD ultimately starts with identifying your own knowledge gaps. It can be helpful to take a self-assessment test to gauge your financial knowledge, and assess which areas you are least confident in. CPD activities can then be focused on specific areas that bridge gaps in financial literacy.
CPD courses in financial planning
How to develop Financial Literacy through CPD
Although by no means exhaustive, the following are some tips on the common skills and knowledge that CPD participation builds to actively improve your financial literacy:
- Budgeting: CPD in budgeting helps participants learn to create a budget by understanding how to monitor incomes and expenses - and allocate an appropriate amount of money to necessities. Advanced CPD learning in budgeting may incorporate areas such as accountancy skills, understanding how to ensure profitability and sustainability, and build knowledge in auditing and financial reporting.
- Understanding Credit: CPD training to understand credit scoring can build knowledge in what a credit score is, and why it’s important to have a positive credit rating. Learning in this area can build understanding of the connection between credits scores and debt and highlight the differences between being in debt and being in financial difficulty.
- Financial Planning: CPD courses in financial planning can provide learners with the fundamentals of saving and investment needs and how they can be met and explore areas such as retirement planning. Advanced CPD learning can build understanding of how effective financial planning supports wider organisational strategy and mission.
- Risk Management: CPD in financial risk management can help foster informed decision making to identify and avoid potential financial scams and fraud. At advanced level learning it can develop an understanding of investment and credit risks, market trends and volatility, and organisation reputational risk in different financial contexts.
- Investment: CPD learning in investment can build understanding of good investments and help take control of your financial future. Knowledge can be developed in distinguishing various investment opportunities such as shares, bonds and property. Continued learning can develop into areas such as corporate finance, investment analysis and managerial accounting.
- Diversification: Relevant CPD can build skills in diversification and learning how to spread money across different investment categories such as stocks, bonds, and property to avoid the risk of one area performing badly. Further learning develops a deeper understanding of the stock market and global trends and the opportunities for building expanded asset portfolios.
- Digital Proficiency: Financial activity and economic activity increasingly take place digitally. Therefore, developing digital skills is often a precursor to financial literacy. Focusing CPD activities on developing digital proficiency can offer shared benefits for finance skill development. Equally, using CPD to learn and embrace new technologies can support the further improvement of financial literacy as financial products and innovations advance.
- Networking: Participating in CPD networking events remains a valuable way to gain knowledge and experience. Networking events provide opportunities to meet like-minded individuals and share their finance experience. Networking can benefit individuals at all stages of their financial learning, but at more advanced levels, presents opportunities to gain crucial market insights, build relationships and understand investment options.
Where to find CPD courses to improve Financial Literacy
Within the CPD Courses Catalogue, there is a range of beneficial CPD learning that can help build financial literacy skills. These include educational events, eLearning programs, conferences, workshops and seminars – all of which have been formally CPD certified. To find out more about a particular CPD course listed on our website, complete an enquiry form and the details will be sent directly to the relevant CPD provider.
How to become an accredited CPD Provider
We hope this article was helpful. Established in 1996, The CPD Certification Service has over 30 years’ experience providing CPD accreditation. With members in over 100 countries, our CPD providers benefit from the ability to promote themselves as part of an international community where quality is both recognised and assured.
If you are interested in offering training or events suitable for Continuing Professional Development, please visit the Become a CPD Provider page or contact our team to discuss in more detail. Alternatively, if you are looking for a free online CPD record tool to help manage, track and log your ongoing learning, as well as store your professional training records and attendance certificates in one simple place, go to the myCPD Portal page.
REFERENCES
- Oxford research to improve financial literacy backed by £1.5m from Capital.com | Saïd Business School: https://www.sbs.ox.ac.uk/news/oxford-research-improve-financial-literacy-backed-ps15m-capitalcom
- PISA 2018 Assessment and Analytical Framework | OECD: https://www.oecd.org/en/publications/pisa-2018-assessment-and-analytical-framework_b25efab8-en/full-report.html
- PISA 2021 Financial Literacy Framework – OECD: https://www.oecd.org/content/dam/oecd/en/publications/reports/2023/09/financial-competence-framework-for-children-and-youth-in-the-european-union_b5562e18/bf059471-en.pdf
