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How much money is spent on advertising financial products?

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If you think about it, you probably see a lot of advertising for products and services for managing your money. Television ads, highway billboards, Internet banner ads, offers in your mailbox, and more.

We decided to find out how much money is spent on advertising to Americans each year for financial products and services. No surprise—it’s a big number. Financial services companies spend about $17 billion each year on marketing. That works out to about $54 a person per year. That doesn’t even count marketing of retirement products, college loans, and investment products.

We also looked at how much money is spent on financial education in America. Again, no surprise—it’s less than the amount spent on marketing. As a nation, we spend only about $670 million dollars on financial education, about $2 a person per year.

Advertising can be helpful and give you important information. By law, it cannot represent a product or service deceptively, but naturally advertisements are biased because they aim to entice you to buy a product. On the other hand, financial education provides more comprehensive and neutral information.

Advertising is intended to attract your attention and persuade. It has to be fresh and new all the time. But the skills and habits that come from financial education can last a lifetime. When you see financial advertising, consider the source. Shop around and ask questions. Ask CFPB is a great place to see unbiased answers to common questions.

You can read the report to learn more about what we found and how we gathered these numbers.

We’re looking for innovative partners for financial education research

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Many of us find it challenging to manage our money and today’s financial marketplace can be overwhelming. That’s why we’re testing innovative strategies to help overcome common financial challenges that many people may face on a regular basis.

For example, many people want to save — for emergencies, college, retirement, or other goals. But they may be overwhelmed by the range of savings products and choices available, and not start saving at all. When people have the option to make savings automatic, more of them succeed in meeting their savings goals.

We’ve been taking a close look at situations like failing to save, where consumers’ actions seem out of step with their goals. We’re investigating what might be swaying the decisions and what solutions or tools might work well. Now we’re ready to test a few ideas and see how helpful they are for consumers.

We’re seeking educational organizations, businesses, and other innovators to work with us to research approaches for helping consumers overcome common decision-making challenges around their finances. Then, we’ll evaluate how well they work and share the results with financial educators, policymakers, and the public.

If your organization is interested in working with us to test a new approach to helping consumers address some key financial challenges, check out the criteria and let us know by November 8, 2013 that you’re interested.

Through a public procurement, we’ve contracted with an independent third party to help us carry out this project. Their site has more information on the program and the criteria.

We look forward to hearing from you!

Live from Madison, Wisconsin!

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Today’s live event has ended.

We were at the University of Wisconsin-Madison with the Financial Literacy and Education Commission (FLEC) for a field hearing on youth and post-secondary financial education. There were remarks from CFPB Director Richard Cordray, followed by a panel discussion, and testimony from consumer groups, industry representatives, and members of the public.

A recording of the event is available below.

It’s back to school season, so let’s have the #MoneyTalk

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With every new school year, your kids get closer to the time when they’ll live their own financial lives. It’s a good time to think about how kids are learning sensible money habits, in school, at home, and in the community. For younger kids, maybe their classroom exercises feature math and money. For teens, they may be able (or even required) to take a personal finance class. Schools, educators, and other organizations offer chances to explore financial games, apps, clubs, and activities. Parents can be a powerful ally in helping these money lessons take root, because research shows that parents have the strongest influence on the way their kids think about money.

Join us next Tuesday, August 27 from 1-2 p.m. ET on Twitter. Just follow along with the hashtag #MoneyTalk; we’ll be joined by folks from Kids.gov and the Jump$tart Coalition.

Let us know if you’re coming by emailing us at FinancialEducation@CFPB.gov.

Got questions about age-appropriate activities for your kids? Just Ask CFPB or submit a question of your own. It’s never too early to help your kids make smart money choices – and it’s never too late.

 

December in August

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August is usually a time when military families are wrapping up duty station moves, squeezing in summer vacations, and getting the kids enrolled in school. The hazy days of summer are not exactly the time when military parents (or kids) are thinking about December holiday wish lists, door-buster sales, and gift wrapping.

But, believe it or not, the holiday shopping season will be upon us in just three short months. You may not be ready to see Halloween candy at the drugstore yet, let alone think about December holiday celebrations. But, preparing for your holiday spending now can help you avoid being served a heaping side of seasonal debt along with your plate of turkey and stuffing. So, here are a few ways you can start your December in August.

Set reasonable expectations

Last year, it was reported that the average American expected to spend $854 on gifts during the holiday season. While many people won’t spend that much on shopping, any spending that strains your finances or saddles you with post-holiday debt is bad for your financial future —period. Take the time now to talk with family and friends about realistic holiday spending limits. Consider less expensive gift options like homemade gifts. If you have a large extended family, maybe it’s time to start a new tradition of picking one person out of a hat to buy a gift for, rather than everybody buying a gift for every single other person in the family.

Plan, budget, and save

Figuring out who’s on your gift list, creating a holiday budget, and gradually setting money aside can help you avoid overspending, unwanted debt, and financial stress. You can find helpful budgeting tools on mymoney.gov. Also, check with your bank or credit union to see if they offer a Christmas club or holiday savings accounts that you can use to save for your holiday goals. Old-fashioned layaway is another option.

Keep the big picture in mind

It can be easy to forget that we spend a lot of money on other things besides gifts during the holidays. Big holiday dinners, travel to see family and friends, and even increased electricity costs to run that massive holiday light display can drain your bank account. Make sure you plan for the cost of all of your extra holiday activities.

Look for ways to save

Doing things like catching early sales, comparison shopping, ordering from sites or stores that offer free shipping, shopping at discount stores, and buying items that offer rebates can help save you money on holiday purchases. Saving money for your shopping and saving money while you’re shopping should be a dual goal.

Watch out for costly surprises

Make sure you fully understand the term and conditions if you’re using gift cards or layaway plans. For instance, expiration dates, inactivity rules, and hidden fees on gift cards can eat away at their value if you’re not careful. Take the same cautious approach with store credit cards that you’re offered at checkout. They might save you a few bucks at the register today, but stick you with very high interest rates later.

Avoid holiday debt traps

Not all deals are a bargain, so don’t get sucked in by holiday “super sales”. If you rush to a store sale because you can get a $3,000 TV for $2,000, you’ve still spent $2,000 on a TV. Was that really something you had planned to do? Also, don’t be enticed by payday lenders who want to “help” you get your hands on holiday cash. Proper planning and saving long before the holiday can help you avoid a cycle of high-interest debt that can last for weeks or even months after the holidays are over.

Keep in mind that holiday spending is short-term spending. Once the unwrapping frenzy is over, how long does the excitement last? Saving your money for long-term goals like home ownership, college or a comfortable retirement may be the very best gift you can give yourself and your loved ones.

Our first financial literacy report to Congress

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Today, we’re publishing our first financial literacy report to Congress. It discusses our approach to financial literacy and the work we’ve done to help consumers make better informed choices about their personal finances and achieve financial goals.

As Director Richard Cordray puts it in his introductory message, “Empowering people to take more control over their economic lives is absolutely essential to our mission. But consumers should not have to go it alone, without ready access to a trusted source of impartial and expert information about matters of consumer finance.”

Our approach to financial literacy is made up of three important principles:

Make sure people have the help they need, when they need it.

As one example, if you’ve got a question, we can steer you to some help right away. Ask CFPB provides unbiased answers to commonly asked questions we’ve heard from people like you.

Research and identify financial education methods that work.

Our research will help us form a basis for evaluating and designing financial education policies and programs, to be shared with other agencies and financial educators.

Collaborate with other groups to apply and fine-tune the best approaches.

We have conducted more than 300 stakeholder meetings to learn about what consumers need and to let them know what we have to offer. We talked with many groups, including faith-based organizations, organizations that serve minority populations, and financial education organizations.

We aim to help consumers as they face large life decisions, such as going to college and buying a home. We also aim to help with smaller decisions with large consequences, such as starting a habit of savings, managing debt, and passing along financial life skills to their children.

If you’ve been following our blog, you’ll probably recognize many of the accomplishments described in the report. But if you want to catch up, the report is a comprehensive resource.