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Financial education

Here’s why childhood is an important time to learn about money


Last summer, we learned that U.S. teenagers are in the middle of the pack when it comes to financial literacy, compared to other nations. Preparing young people for a solid financial future is an important job. And much work remains.

Some recent research looks at how young people build financial skills, habits, and attitudes. The research also emphasizes how parents can model and teach helpful financial habits to their children at an early age.

If you have kids, it might surprise you to know that children as young as five years old can be ready to learn about saving and spending. From early childhood to young adulthood, you can build the foundation to enable them to manage their finances as adults.

Here are some key takeaways from researchers that you can put into practice:

Children as young as five can learn about saving

Research suggests that children are “developmentally capable” of saving by age five. A piggy bank or savings account gives them a hands-on way to build a savings mindset. And parents take note: your child may acquire a taste for financial planning that lasts well into adulthood. The same research shows that children who grew up with a savings account were more likely to hold “diverse asset portfolios and to accumulate more savings as young adults.” That’s a powerful piggy bank!

An allowance isn’t just about money, it’s about guiding your child

Access to money from gifts or from a steady allowance, by itself, may not help your child build habits he or she will need as an adult. Research observed that giving an allowance on its own was an ineffective way to build a child’s financial skills—the benefits came when the child also got guidance on saving and budgeting along with the allowance. According to the research, “parental oversight as to how the money is spent, and parental teaching about budgeting and the necessity of saving, was found to be most effective.” So when you provide opportunities for saving and spending, talk to your children about their decisions.

Young people learn from hands-on experiences

Teenagers can practice financial skills and decision-making. As they manage their first paychecks, and the spending and saving choices that go along with them, parents are still a sounding board. Listening and providing guidance to your teenager can provide a safety net, so that he or she can learn from experiences and mistakes (let’s be honest, there are bound to be a few).

Young adults learn financial skills more and benefit when they have opportunities to make their own financial decisions, while still receiving guidance and feedback. For example, a program that included connecting economically disadvantaged youth to a job and savings account, and providing just-in-time financial education, showed promising results. Youth experienced “both an increase in knowledge and an increase in the application of that knowledge.”

For more ideas on teaching your kids about money, check out our resources for parents.

We are also working to help schools or communities provide youth with more access to hands-on learning around financial education. If this interests you, feel free to share our K-12 financial education guide with your local school. Financial educators can also check out the resources available as they serve the community.

The launch of the CFPB financial coaching initiative


Today, we launched our financial coaching initiative. The launch featured remarks from Director Richard Cordray and Secretary of Labor Thomas Perez, as well as other key program participants.

The live event has now ended, but we’ll have a recording available here soon.

Our financial coaching initiative

Whether you’re a veteran who has recently transitioned to life in the civilian world, or a consumer facing economic challenges, having a trusted, well-informed advisor can increase your odds of success. Our financial coaching initiative will provide guidance to recently-transitioned veterans and vulnerable families in places where they’re already going for help. We’ve joined forces with the DOL and more than two dozen non-profit social-services providers to place 60 certified coaches in DOL American Job Centers and community-centered non-profits across the country. These professionals will provide one-on-one free coaching to help these consumers craft a personalized plan for financial success.

You can download a printer friendly list of financial coaching delivery sites.

Updated on May 26, 2015 to include the financial coaching delivery sites.

Save the date: Join us for a Credit Union Advisory Council meeting in Washington, DC


Join us for a Credit Union Advisory Council meeting with Director Cordray on Thursday, March 12 from 3 to 5 p.m. EST. During this meeting we will discuss the role of credit unions in cultivating consumer financial education and financial capability.

Consumer Financial Protection Bureau
1275 First Street NE
Washington, D.C. 2002 Washington, DC

This event requires an RSVP. All of our Advisory Board and Council meetings are open to the public.

Please send us an email to RSVP.

You can check out the meeting agenda and event flyer. See you there!

You’ve got goals for your life—and some of them take money to achieve


America Saves Week infographic

When you look ahead to your future, what kind of changes do you see?

You might envision major changes, like moving to a new city for a new job, starting a family, or helping your kids move out and live on their own.

You might anticipate smaller changes too, like starting a hobby or exercise program, upgrading your home appliances or technology, spending more time with friends or family, or volunteering more. Maybe you want to reduce your debt, or save up for a purchase instead of charging it.

Goals, whether long term or short term, usually cost money to accomplish. That means when you have a life goal, you probably have a financial goal, too.

Life goals—and financial goals—can be small or large, short-term or long-term. Helping consumers reach their own goals is an important part of our mission. Whatever your goals are, here are a few steps that can help you reach them:

  • Set a financial goal. Let’s say you want to go on a vacation next year, and you set a goal of saving $1,000.
  • Break it down into specific steps. You could decide to save $1,000, for example, by bringing lunch from home instead of buying it for $5 a day. Or you could set aside $20 from your pay every week for 50 weeks. Or you could find additional income from an extra shift or side job.
  • Set up the system you need to make it work. Sometimes we forget the small things that can get in our way—like making sure you have the right kitchen supplies and groceries to make lunch every day, or opening a savings account to keep your vacation fund separate. Set up what you need in your life, so that you don’t have excuses to miss your goals.
  • Get help sticking to your plan. You can set up automatic transfers at your bank, moving funds automatically from checking to savings. You can set a weekly alarm on your phone. You can ask a friend to remind you—or join you and save along with you.

America Saves Week can help you get started—and stay on track

Taking place from February 23-28 this year, America Saves Week gives you an annual chance to get started on saving. If your own goals include saving for the future, take the America Saves pledge today, and you’ll stay motivated all year with tips and reminders.

Now is the time to think about how to achieve the changes you envision for yourself. Know what motivates you, then take action. By meeting your financial goals, you’ll make a start on following your life goals.

When thinking about setting financial goals, consider what financial well-being means to you. Learn more about what consumers across the country told us about their financial lives and views of financial well-being.

No-sweat ways to help kids start out strong, financially


America Saves Week is coming up on Feb. 23. This annual event helps thousands of us start out on a regular program of saving money toward our goals. We’ve all got goals and plans for the future, and a lot of them cost money.

Parents, take the America Saves pledge and get started on saving today.

If you’re a parent or caregiver, setting up savings is also a great opportunity to include your kids. Here’s a quick guide to encourage your kids to start thinking about saving. We’re never too young (or old) to learn!

For kids age 3 to grade 2: Talk about basics and plans

Most young children aren’t ready to talk about bank accounts or compound interest, or think too far into the future. But they can use basic math and understand what it means to plan ahead—both are important building blocks for good financial habits. Try these activities:

  • Talk about events that need advance planning, like a special birthday or holiday, trip, or occasion. With your child, make a list to get ready. (It doesn’t even need to be about money—it could be any kind of planning ahead, like what kind of food you’ll make or bring, or what you’ll pack in a suitcase.)
  • Ask how much money you could spend now, if you have $10 and you save $1 for later. If your child is ready, offer a way to save in a piggy bank or jar kept in a visible location. After a while, check in to ask how much is in the jar, and talk about what your child plans or imagines for the money.

For kids grade 3 to middle school: Emphasize values and what money means to you

Kids in this age group are looking to you to understand what’s “normal” in the world of money. This helps them build a good mindset and start to appreciate what your family’s values are. And they can start habits of their own. Try these activities:

  • Talk about the advertisements that you see together. Take a picture or cut out ads that stand out for you in some way. If it’s something your child wants, talk about whether it means giving up something else.
  • Tell your child a story about having saved money, or missing out on saving, and what you learned from your own experience.

For young people in high school and older: Work on research and real-life decisions

High school students are typically ready for some hands-on lessons about money. From you, they can learn how to go about asking the right money questions and finding reliable answers. And they can experience for themselves, at a small and safe level, how it feels to manage their own funds. Try these activities:

  • Ask your kids to help you choose a savings account. Decide together what features you’ll compare, like services, conveniences, and fees. If you want, go ahead and open the account for your teenager! (For kids under 18, you’ll probably have to bring along all your paperwork and put your name on the account.)
  • Help your teenager come up with a money habit he or she can stick to—like bringing only a small amount of cash when going out with friends, or mentally calculating how many hours of work it would take to pay for a purchase.

Four elements define personal financial well-being


You probably have a few goals in mind when it comes to thinking about your financial life. You might think about taking more control over bills, or getting to a specific point like paying off a credit card, or making an important purchase. We want to help people improve their financial lives, so we want to help them set goals that can make a real difference, and work toward them. That’s why we talked to consumers across the country, to hear what they had to say about financial well-being and what it means to them.

You can see what we learned in our report on financial well-being.

Savings and income are part of financial well-being, but we learned that they’re not always the most important part. Instead, when people talked about their own financial well-being, four main elements came to light.

Feeling in control

People who have high levels of financial well-being feel in control of their day-to-day and month-to-month finances. They cover their expenses and pay their bills on time, and generally they do not worry about having enough money to get by. This is not just about having money, they told us, it’s about managing it. Think of this as having financial security, in the present.

Capacity to absorb a financial shock

Whether they get in a car accident or are temporarily laid off from a job, these consumers have a safety net such as savings, insurance, or family to help stop a shock from turning into a longer-lasting setback. One way to describe this is feeling financial security, for the future.

On track to meet goals

Consumers with a higher sense of financial well-being tell us they are on track to meet their financial goals. Whether or not they have a formal financial plan, they are setting goals that are important to them, and working toward those goals. Think of this as moving toward financial freedom, for the future.

Flexibility to make choices

These consumers have the financial freedom to make the choices that allow them to enjoy life, whatever that means to them. Whether that is taking a family vacation, going out to eat, or working less to spend more time with family, these consumers have the financial flexibility to do what they value and what makes them happy. This can be described as having financial freedom, in the present.

Applying this framework to your own financial life might help you feel more satisfied with the decisions you make too. When you face a financial choice or task, consider how your actions might affect financial security and financial freedom, today and in the future. To learn more about how consumers described financial well-being in their own words, check out the full report.