Pittsburgh Is Aiming for an A+ in Financial Education: Lessons from the Steel City

From Steel Fabrication to Financial Education

Originally noted for its important role in the US steel industry, Pittsburgh has in recent decades transitioned from the “Steel City” to a “smart city” and technology hub. But Pittsburgh isn’t just “smart” in terms of technology. It is also striving to expand financial education programs to bolster access to credit and financial services and promote financial health among its residents.^1,2

Across Pittsburgh, various organizations are committed to increasing access to financial education. For example, since its launch in 2019, the Allegheny County Financial Empowerment Center (FEC) has provided free financial counseling to 2,753 individuals through 8,383 counseling sessions. This has enabled

• 867 clients to contribute to long-term savings
• 686 clients to raise their credit scores by 35 points or more
• 321 safe and affordable bank accounts to be opened
• a 1,192 reduction in the number of delinquent accounts

Overall, according to the Allegheny County FEC, the 2,753 clients that have used its financial counseling services have achieved $3.1 million in savings and an $8.1 million reduction in debt.³

Pittsburgh’s efforts to bolster financial education echo those of Pennsylvania as a whole. As of 2024, taking a personal finance course is a requirement for high school graduation in 35 states, up from 23 states in 2022, and Pennsylvania has among the most rigorous standards nationally. In 2023, Pennsylvania required a standalone personal finance course in order to graduate, with the state’s full financial education curriculum and standards set to be implemented for high schoolers in 2026–2027.^4,5 The curriculum is set to have six general areas of focus: personal finance fundamentals, income, spending, saving and investing, risk and insurance, and credit.  For those in the neighboring state of Ohio, the Cleveland Fed offers a free guide to help educators and schools meet Ohio’s financial literacy curriculum standards.

The Impact of Financial Education

So, is the focus on financial education justified? Research suggests that it is. A 2024 report by the Teachers Insurance and Annuity Association of America (TIAA) and the Global Financial Literacy Excellence Center (GFLEC) shows that lower levels of financial education can lead to weaker financial health, also referred to as financial well-being. Using the TIAA Institute-GFLEC Personal Finance Index (P-Fin Index),⁶ the authors find that only 48 percent of US adults correctly answered key financial questions. In addition, the report shows that individuals with lower levels of financial education were

• four times as likely to typically have difficulty making ends meet
• nearly three times as likely to be debt-constrained (unable to progress toward longer-term financial goals such as saving adequately for retirement because of their current debt)
• three times as likely to be financially fragile (not confident they could come up with $2,000 if the need unexpectedly arose in the next month)
• more than four times as likely to lack emergency savings sufficient to cover one month of living expenses⁷

Research shows that financial education improves behaviors related to saving, budgeting, and credit usage. One study finds that requiring financial education in high school increases credit scores and reduces credit delinquencies among young adults, while another finds that it reduces the use of payday borrowing. The knowledge and skills acquired through financial education become even more critical during economic shocks, whether it is a shock to a household such as the loss of a job or an external shock such as a downturn in the economy or, more recently, an increase in inflation. Stanford’s Institute for Economic Policy Research has found that individuals with greater financial literacy are generally able to better weather these types of economic shocks.

Financial education also strengthens financial inclusion, defined as the ability of individuals to access useful and affordable financial products and services. The Aspen Institute, which worked with partners to create a national strategy for an inclusive financial system, believes that such inclusion is essential because of the current financial fragility of US households. The findings of Aspen’s November 2023 report, “The State of Inclusion in the U.S. Financial System: Benchmarking Progress, Gaps, and Disparities,” include the following:

• Only 49 percent of US households report routinely positive cash flow.
• Only 51 percent of US adults indicate that they could come up with funds in an emergency without difficulty.
• For US households in the bottom half of the wealth distribution, the median net worth is $12,500.
• Among US households, 10.4 percent, or about 13 million, have a negative net worth.
• Only 42 percent of US adults enjoy high or very high financial well-being.

Another measure that can support financial well-being is increasing accessibility to financial products and services that are safe and affordable. For instance, when individuals first seek to access credit, many may not have begun building credit or may have thin credit files. There are various activities focused on increasing credit access for these individuals in different ways. Some financial institutions offer small-dollar loans (usually less than $500), not only because they can be critical financial lifelines, but also to help individuals start building credit. Another supportive practice to increase access to credit is the use of alternative data in the underwriting process. These may include data that show an individual is paying their rent or utilities or that they are getting a paycheck every two weeks. These types of practices may help a financial institution better understand consumers with little or no credit history and increase access to credit in a safe and sound manner, thus supporting the broader US economy.

Future Directions

In Pittsburgh and some other cities across the United States, community partners are already working to create partnerships that build upon and enhance financial education to improve financial health and well-being. Leveraging organizations such as nonprofits, financial institutions, and local governments that have representatives who already teach financial education could help further enhance these curricula, giving individuals better skills to help them navigate financial milestones. In addition, nonprofits and financial organizations could continue to partner with other organizations to expand access to financially inclusive products and services. The research suggests that working proactively to improve financial education for US households today will help support a stronger and more financially resilient economy tomorrow.