The team will research and design a national service that will enable all Britons to access impartial financial advice of a high standard.
When the taskforce completes its work, the government will put forward an action plan detailing how financial capability will be incorporated into other services.
Mr Balls said: “Financial products are complicated and there can be too much jargon.
“This puts people off, or they can end up buying something that is not right for them. Sometimes people just want to discuss their financial options and not buy anything.”
John Tiner, chief executive of the Financial Services Authority (FSA), has welcomed the move by the government and said that it complements the FSA’s own programme of education.