Improving household financial literacy can mean the difference between arriving at retirement age with no assets and enjoying more than three times the net worth of a neighboring household, according to a recent white paper published by the National Bureau of Economic Research.

Maarten van Rooij, Annamaria Lusardi, and Rob J. Alessie used a methodology developed for the Dutch Central Bank to survey Americans about their ability to manage credit cards, mortgages, personal loans and retirement accounts. The results show that financial literacy can contribute more to a consumer's household wealth than their income over the years.

According to Economic Times columnist Mythili Bhusnurmath, developing financial literacy helps reduce complexity of decision making about saving, spending and investing. Americans who get frustrated with their financesmay neglect other areas of their life, say the NBER researchers. Even though home ownership is commonplace across the country, a lack of understanding about how to manage assets prevents many Americans from enjoying the benefits of compound interest and equity growth.

Schools and employers take on financial literacy projects

In a special report for Education Week, Caralee J. Adams chronicled growing concern among high school and college administrators that today's college graduates will leave school without the ability to manage debt. As the Consumer Finance Protection Bureau prepares to help educate students about the dangers of taking on too much debt, some states and colleges now require students to complete financial literacy courses before graduation. College financial aid administrators told Adams that many students sign up for credit cards and expensive private loans because they intend to "worry later" about earning the money required to repay their debt.

Employers have taken up the cause, as research indicates that debt-related stress can reduce job performance. According to the Society for Human Resource Management, three in ten American employers now offer one-on-one financial advice as an employee benefit. SHRM teamed with the American Institute of Certified Public Accountants to launch the "Workplace Leader in Financial Education" (WLIFE) Award, designed to encourage more employer-sponsored financial literacy programs. Credit card issuer American Express earned one of nine inaugural WLIFE awards for its commitment to improving financial wellness among employees who routinely help customers with major money decisions.