Thank you, Skip. You know Skip from his service as the Minnesota Attorney General and in various other capacities; I came to know him as a thoughtful and valued colleague in our work at the Consumer Financial Protection Bureau. His contributions to our work protecting consumers in the financial marketplace – and especially protecting older Americans – have been plentiful, and I am glad to see him again today.
We are here to discuss a topic that has become a passion of mine – financial education. Over the years, I have sought to further financial education at the local, state, and now federal levels. It is a joy and a privilege to be here with all of you who understand how important financial education and financial capacity are to our country’s future.
Let me congratulate the Minnesota Financial Literacy Interagency Work Group for their hard work to promote financial well-being. It is a daunting and noble task. Minnesota has always been at the forefront of progress in supporting the rights and interests of working Americans, and has consistently been one of the leaders in financial literacy efforts. So we are delighted that the state is using our “Your Money Your Goals” toolkit.
Thanks to the leadership of Mike Rothman and his team, the Work Group’s ten state agencies are demonstrating how states can play a key role in strengthening financial capability as they provide a range of services to their residents. The “Your Money Your Goals” toolkit provides training to social service providers in order to address financial issues that can interfere with their clients utilizing their services successfully. Nationwide, over 3,500 frontline staff have now been trained to use the toolkit, and they are already using its information and tools to serve tens of thousands of consumers.
Let me give some background on this new resource. The “Your Money Your Goals” toolkit was developed to increase access to information for low-income consumers. We sought to equip frontline staff, such as social services case managers, with tools to help their clients identify financial challenges and goals, create savings and spending plans, understand credit, manage debt, choose financial products, avoid tricks and traps, and access consumer protections.
The original toolkit was field-tested by more than 1,600 people across various organizations and has since been widely adopted. New versions of the toolkit have now been adapted for use by legal aid groups, community volunteers, and labor unions as well.
The people who are being trained on the toolkit often serve consumers who face some unique challenges in the marketplace. These consumers may lack access to critical information that would help them work toward their financial goals and achieve financial stability. The “Your Money Your Goals” toolkit helps staff and volunteers connect many of these consumers to unbiased information on such topics as goal setting and the importance of savings to achieve financial stability.
But the toolkit is more than just information; it also includes tools to help staff assist consumers in these areas. Information alone is only part of the answer, for it is when information combines with action that we are able to bring about lasting change.
Here in Minnesota, work group members have collaborated and built partnerships that have resulted in the development of innovative ways to share the toolkit. The Department of Employment and Economic Development has set a goal of training each one of its frontline employment counselors to share relevant information and tools with clients as they search for jobs. The credit union network here is also training staff, and participating credit unions are now sharing the toolkit with thousands of their members.
The toolkit is just one way we at the Consumer Bureau are working to empower and educate consumers. In the wake of the recent financial crisis, the need for financial education as well as strong consumer protections is clear. This generation of Americans faces increasingly complex financial decisions around mortgages and many other kinds of household credit. And their lack of training in these matters makes it difficult for them to make sound and sensible decisions about how to manage their affairs, especially when confronted with predatory practices.
The Consumer Financial Protection Bureau is a brand-new agency filled with fresh enthusiasm to face and address these issues. So we have made it a point to encourage consumers who come to our website to tell their stories. We are the first federal agency with the sole responsibility of protecting consumers in the financial marketplace, and we are committed to helping people make sustainable choices about the ways and means of their lives.
We are doing all we can to see that consumer financial markets work better for them, and we are imposing new protections to ensure these markets are transparent, reliable, and fair. We were created, in part, to take steps to help ensure that the financial crisis never repeats itself. A fundamental aspect of our mission is to help educate the American public about personal finance.
Unless we can force change on these issues, millions of young people who lack the skills to make effective financial decisions will find it harder to become productive and capable citizens. Unnecessary debt, missed opportunities to save money, poor credit history, and a general feeling of helplessness and desperation at finding themselves underwater throughout their lives will block them from the resources and opportunities that could improve their futures.
Benjamin Franklin once said, “An investment in knowledge always pays the best interest.” In the case of financial education, that can be true both literally and metaphorically. At the Consumer Bureau, we are working to empower consumers to take more control over their economic lives. We know that financial education is about more than websites and flyers, more than speaking earnestly and meaning well – it is about working with consumers face-to-face and finding ways to effect systemic and lasting change.
Let me talk about these issues a bit more broadly. The challenges that confront us in achieving this goal of financial capability are complex, varied, and significant. To overcome them, we must start early. Financial education should be as fundamental as the education we are all required to receive in mathematics or the language arts.
Because children form their financial identities early, it is important for parents to begin talking with their children about money at an early age. We now offer resources to help parents with these conversations. Our website offers “Ask CFPB,” an interactive online tool that gives consumers expert and neutral answers to more than a thousand commonly asked questions, including some that help parents and guardians learn about “money basics” in order to begin those conversations at home.
Last summer, along with the FDIC, we created a new website, consumerfinance.gov/parents, that has a series of age-appropriate resources to help parents engage with their children on financial topics. Through these kinds of reliable resources, we can help parents build know-how and confidence for themselves and in offering guidance to their children.
One of the goals shared by many of us involved in this movement is to make sure these kinds of lessons are integrated into the classroom curriculum – where the benefits of compound interest are understood in math class; where economic costs and risks are taught in social studies class; and where essays in English class include topics involving money and its role in our society. To that end, we are organizing materials for teachers in partnership with the FDIC by creating an online, self-service resource center. It will feature videos, tools, practical tips, and other sorts of resources that teachers can use in the classroom. Plenty of great resources already exist; what we need is to do is a better job of promoting their accessibility and ease of use for our busy teachers.
Our financial education efforts are extending beyond the classroom. We are also working to empower consumers throughout the life cycle and across the economic spectrum. We also are helping older Americans protect their assets and prepare for financial security later in life. The Bureau is home to the only office in the federal government specifically dedicated to the financial well-being of seniors. Rather than enjoying the respect that is due them, our elders are often the target of malicious schemes designed to deceive them and drain their savings.
For this reason, our Office for Older Americans works to improve prevention and identification of financial exploitation. We also help seniors navigate the many important financial decisions they must confront as they age. We offer resources on topics like reverse mortgages, financial advisers, and avoidance of fraud. We also offer guides for financial caregivers to help them carry out their duties and responsibilities when they are managing someone else’s money.
Another group of consumers we focus on is servicemembers. Our Office of Servicemember Affairs is led by Holly Petraeus, and she and her team have been to more than 90 military installations across the world so far. They bring back compelling stories about some of the special problems faced by our military and their families, and we work to find solutions. We have also launched a series of informative videos tailored to those in the military or their families, covering topics such as student loan servicing, mortgage servicing, debt collection, and veteran-related issues.
One crucial set of decisions for many families is how to pay for college. In partnership with the Department of Education, we created the “Financial Aid Shopping Sheet,” which lets prospective students see hard numbers in a common-sense format, so families can compare the true costs of their available options – before they commit to a school. Thus far, nearly 3,000 schools have adopted the Financial Aid Shopping Sheet. And we have now built an even more comprehensive set of tools we call “Paying for College,” available on our website at consumerfinance.gov. It walks people through the experience of making decisions about how to pay for higher education, which they may be facing for the first time in their lives.
In order to further help all consumers in the marketplace, we also conducted research that specifically examines what financial well-being means to consumers, since that is really the ultimate goal of financial literacy. What we found is that consumers do not see financial well-being as based solely on how much money you make. They also see it as having financial security and freedom – both now and in the future. Consumers who live within their means, have a financial cushion, and make a financial plan, all report having a strong sense of financial well-being.
Many consumers ask us where to start to get to that point. Our research suggests that consumers do better when they ask, plan, and act. That is, when they ask for information to help them make the best financial choices, set realistic goals and make plans to meet them, and then take advantage of resources they have to stay on track. The work you are doing with the “Your Money Your Goals” toolkit is an excellent way to help people do that.
People deserve some peace of mind that the financial world is not full of pitfalls that will ruin them. There is not a single good reason – none – that should prevent any American from gaining the knowledge and skills needed to build a healthy financial future. Collaboration among a wide range of stakeholders, including those of you here today, will make it possible to achieve that goal. We are grateful to serve alongside you in this most worthy cause. 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.