By: Melissa Koide
The Council’s report includes a number of recommendations to help improve the financial lives of American individuals and families. First, the report finds a critical need to bring rigorous financial education to our young people. Financial education is the foundation for better decision-making, and it should start early and continue to be taught in school. Treasury is responding to this recommendation by establishing a new agenda for the federal government to improve the financial knowledge of our young people through the federal Financial Literacy and Education Commission (FLEC), which Treasury chairs. The 21 agencies that are a part of the FLEC are working to equip parents and teachers to be able to better educate students about money basics and paying for college, and help employers communicate with young workers about saving early for long-term needs like retirement.
The PACFC report correctly identifies the workplace as an important way to reach millions of individuals with financial information and, as part of the FLEC, the Department of Labor is leading an effort to develop and deliver financial education to the federal workforce. While powerful in its own right, the lessons learned from this effort within government will be useful in demonstrating the value of workplace-based financial education to the private sector and an effective way to implement it.
The Council’s report also focuses on improved coordination between local government, business, and community leaders. Local financial capability councils, which are created and planned by state, tribal, and local leaders, were inspired by the President’s Advisory Council and will be critical in turning ideas into action. Local leaders have the ability to bring together educators, business leaders, community organizers, and others in their neighborhoods committed to creating paths to success for community residents. To help their efforts, the Council created a resources guide, which can be found here.
Finally, the report emphasizes the importance of research and the need to establish a baseline understanding of financial knowledge, particularly among young people. Financial education will not be successful unless we have a rigorous evaluation of metrics and testing to determine what actually works to change financial behavior. Last year, the Department of Education funded the Program for International Student Assessment (PISA) financial literacy module. PISA is the first ever international examination of high school students’ financial knowledge. The results, to be released next year, will give us a baseline picture of what high school students know about personal finance, and it will help us understand how our youth compare to their peers around the world.
Treasury’s MyMoneyAppUp Challenge was also inspired by this Council’s work and highlighted the powerful potential of technology in financial capability by inviting app designers to submit app ideas focused specifically on financial education. We are working with our colleagues at the Department of Education to explore how technology can be used to better educate young people about finance while testing out new and innovative education strategies.
The clear vision put forth by the Council should inspire all of us, in government, and in the private sector, and our own lives, to consider what more we can do to advance greater financial knowledge and understanding for our young people. The recommendations of the Council have provided solid direction for carrying on this work. At Treasury we will continue to look to new and innovative methods to improve financial literacy in support of the basic idea that a sound economy stems, in part, from financial capable citizens.
Melissa Koide is the Deputy Assistant Secretary for Consumer Policy at the U.S. Department of the Treasury and served as the Executive Director of the President’s Advisory Council on Financial Capability.
John Hope Bryant is a thought leader, founder, chairman and CEO of Operation HOPE and Bryant Group Companies, Inc. Magazine/CEO READ bestselling business author of LOVE LEADERSHIP: The New Way to Lead in a Fear-Based World (Jossey-Bass), the only African-American bestselling business author in America, and is chairman of the Subcommittee for the Under-Served and Community Empowerment for the U.S. President’s Advisory Council on Financial Capability, for President Barack Obama. Mr. Bryant is the co-founder of the Gallup-HOPE Index, the only national research poll on youth financial dignity and youth economic energy in the U.S. He is also a co-founder of Global Dignity with HRH Crown Prince Haakon of Norway and Professor Pekka Himanen of Finland. Global Dignity is affiliated with the Forum of Young Global Leaders and the World Economic Forum. Mr. Bryant is a thought leader represented by the Bright Sight Group for public speaking. Mr. Bryant serves on the board of directors of Ares Commercial Real Estate Corporation (NYSE: ACRE), a specialty finance company that is managed by an affiliate of Ares Management LLC, a global alternative asset manager with approximately $59 billion in committed capital under management as of December 31, 2012.