Flying somewhat under the radar, President Obama last month authorized another commission to help raise financial awareness—this one focused solely on young people. Members will be selected from the private sector over the next few months, and the group should hold its first meeting by the end of the year.
We already have a Financial Literacy and Education Commission comprising the heads of 21 federal agencies including Treasury and the Consumer Financial Protection Bureau. This group put together our national strategy for financial education and runs MyMoney.gov, an impartial personal finance website.
We also have had a President’s Advisory Council on Financial Capability comprising private-sector leaders in finance and education. This group issued its final report in January offering ideas for improving personal finance education and was responsible for two helpful websites—moneyasyougrow.org, which details what kids should know about money at what age, and moneyasyoulearn.org, which offers teachers tools to integrate personal finance lessons into subject areas like math and English.
Now we have the new President’s Advisory Council on Financial Capability for Young Americans. As the name suggests, this puts the federal government’s focus on young people. That is precisely where it should be as it relates to raising the financial I.Q. of Americans. The new group’s mission will be to:
- Build the financial capability of Americans at an early age in schools, families, communities, and the workplace
- Teach young people the difference between wants and needs, the importance and power of saving, and the positive and productive role money can play in their lives
- Promote a basic understanding of money management at an early age
- Better equip young people to tackle complex financial decisions surrounding student loans and saving for retirement
Countries such as Australia and Britain have mandated that financial education be part of every school’s curricula, signaling the importance of reaching young people and making money decisions a natural part of their life. We have no such mandate in the U.S. and likely never will. But we’re making progress.
The JumpStart Coalition for Personal Financial Literacy and the Council for Economic Education, two leading nonprofits in the fight against global financial illiteracy, have crafted standards to help schools in all 50 states begin to teach personal finance. They were instrumental in creating a model that encourages and instructs teachers interested in taking on the mission. There is now a broad effort to get personal finance incorporated into the common core initiative, which 46 states have agreed to. Private sector organizations like the credit card company Visa and accounting firm PwC have contributed millions of dollars to train teachers.
Personal financial know-how on a broad scale is seen as the best way to avoid another financial crisis. After all, if you understand that you can’t afford the mortgage when the teaser rate expires, you probably won’t buy the house. Adults need help too, and that’s partly why we have the CFPB—to keep financial institutions from preying on those with little money savvy. But a council dedicated solely to young people puts the financial literacy mission squarely where it belongs. This is a long-term approach. We might as well get started.