Prepared Remarks of CFPB Director Richard Cordray at the Jump$tart Coalition Awards
It is encouraging to be here with so many people who share similar goals and ideals for our young consumers. All of us in this room are bound together by a common thread. That thread is the important mission of establishing a financial marketplace that is responsible and sustainable for individual consumers. We are working to educate and empower consumers to create opportunities for themselves and their families.
Jump$tart’s leadership and efforts to promote financial literacy for the next generation are deeply admirable. Over the years, financial education has become an intense passion for me that I have pursued at the local, state, and now the federal level of government. I have come to know firsthand how important it is for our school districts, and for public officials, to be directly engaged in the financial education of our children. And above all, I am clear in my mind about the immense task before us and how much more needs to be done.
The markets for consumer credit and household finance hold more potential than ever before, but they are also more complex than ever before. And with complexity comes more risk of getting it wrong and being harmed. When my parents were raising a family 50 years ago, the products and services available to them were more limited but also more straightforward. Basic mortgages, a few in-store credit cards, and some limited consumer loans were about all they had to choose from. There was not much to be done with them, but it was not possible to get into too much trouble unless you tried pretty hard to do so.
Today, the array of offerings is much broader and the actual mechanics can be harder to grasp. On the front end, credit reporting and scoring have opened more horizons for tapping consumer credit markets. On the back end, the increased tools and resources available to debt collectors, along with computerized recordkeeping, may lengthen the damaging tail of credit failures. Over the years, strenuous efforts to address consumer finance issues through detailed and extensive disclosures have had only partial success. This approach has made it hard to distinguish what is important from what is unimportant. Consumers may fail to understand the description of costs and risks and many simply avoid wading into the increasingly fine print altogether.
This is the world that awaits our young consumers. And, unfortunately, most of them lack the skills to make effective financial decisions and accordingly will find it harder to become productive and capable members of society. Unnecessary debt, lack of savings, and poor credit history will block them from the opportunities and resources they need to improve their futures.
To combat this situation and to get our young people ready for a complicated financial world, we need to start early. In the classroom, financial education should be as fundamental as the education we are all required to receive in mathematics or the language arts. And in the home, financial education should be as fundamental as the education we receive from our parents about keeping a clean house or being good citizens of our communities.
The role that a parent or caregiver plays is critical in shaping what young people learn to do about this essential aspect of their lives. Children form their financial identities early. Parents and caregivers are the first people many children go to for answers to their money questions. This is especially important because currently only 17 states require high school students to take a personal finance course in order to graduate. We all need to advocate persistently and incessantly to increase that number. So the job of educating our children financially really does fall mostly on our parents and caregivers.
Money lessons taught early in life can provide a lifetime of benefits. The Consumer Financial Protection Bureau now represents an enduring presence in this field through our Office of Financial Education, and we have new resources to help. Even if a caregiver does not feel like a financial expert, there are valuable lessons to be passed on. Our website offers Ask CFPB, an interactive online tool that provides answers to over a thousand commonly asked questions about consumer finance. Some of these questions and answers are designed to help parents and guardians learn how to talk to children about “money basics” in order to begin those important conversations at home.
We also have created consumerfinance.gov/parents, which offers a series of age-appropriate resources to help parents engage with their children on financial topics. We developed the site in collaboration with our valuable partner, the FDIC, including Chairman Marty Gruenberg, who has become my close and respected friend and colleague. We agree that by directing parents to these kinds of reliable resources, we can build know-how and confidence in helping their children work with these tools. At the same time, as parents are able to provide solid information and guidance to their children, they will learn more about their own financial management as well.
Many of these great resources cover such matters as spending and money management, savings, earnings, investing, and other topics. No matter whether your child is in elementary school or preparing to enter adulthood, we have identified the best reliable and trustworthy information to guide and support parents and caregivers in these areas.
Last April, we began collaborating with the FDIC to improve financial education and decision-making skills among American youth from pre-K through age 20. Today we are taking our goals one step further by working with the FDIC on the re-launch of its valuable Money Smart program for young people of all ages. The Money Smart tool is a fantastic resource to start conversations about financial topics and help build successful financial futures. It is presented in an easy-to-digest format that helps teachers, parents, and young people themselves. These free resources can be found at the FDIC’s Money Smart page. We encourage all Jump$tart members to make good use of them. The partnership between the FDIC and the Consumer Bureau will create a public conversation and greater awareness about the important role that parents play in teaching their children about sound financial decisions.
With a growing number of public, private, and nonprofit organizations that are committed to promoting K-12 financial education, no one needs to go it alone. The Consumer Bureau recently released a new resource guide for policymakers, which can be found on our website. This guide will help connect policymakers with tools, information, and insights to enhance K-12 financial education efforts. It includes information for policymakers on how to lay the groundwork, build the initiative, and extend the impact. Our work uncovered that while a strong foundation exists to support K-12 financial education, we all need more coordination and sharing of resources. Over the next few months, we will be aiming to put this guide into the hands of interested stakeholders and solicit feedback on how to improve it further. Please help us do that yourselves.
I also want to mention that across the country, the Consumer Bureau is partnering with libraries – in communities and in schools – to provide tools, materials, and other resources on financial education. We are sharing our ideas for money-themed programs and activities. Libraries have been keenly interested in this partnership, with more than 1,900 locations now participating around the country. Through this work together, we are helping libraries become an unbiased, trusted source of financial education and information for their patrons.
So we are moving full steam ahead to develop various ways to increase youth financial capability. We look forward to teaming up with each of you to strengthen and improve our country through this important work. Thank you.
The Consumer Financial Protection Bureau (CFPB) is a 21st century agency that helps consumer finance markets work by making rules more effective, by consistently and fairly enforcing those rules, and by empowering consumers to take more control over their economic lives. For more information, visit www.consumerfinance.gov.