How the Banks Are Winning Now

For the first time, a report quantifies what we're up against in the effort to equip ordinary people with the ability to deal with banks.

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One of the long-standing arguments against teaching personal finance in school is that marketing messages promoting debt and consumerism quickly overwhelm any lessons kids might receive about credit management and frugality. So it’s all a waste of time.

No one knows for sure if that’s the case. But it’s sound theory, and at least now we know what we’re up against. For every $1 spent on financial education $25 is spent on financial marketing, according to a yearlong study from the Consumer Financial Protection Bureau, a federal watchdog agency.

Calling the spending difference “staggering,” director Richard Cordray said, “That means the majority of information consumers receive about financial products comes from a company trying to sell them something.”

This is hardly a surprise. Most families avoid talking about money at home and only in the last few years has there been any push to educate the public about personal finance through schools or the workplace. This financial knowledge gap clearly played a role in the recent recession—after consumers had loaded up on high-rate credit-card debt and signed up for ill-advised mortgages.

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The bureau found that the financial services industry spends $17 billion each year hawking financial products and services while government, nonprofits and financial institutions spend $670 million providing financial education. The biggest financial education chunk comes from nonprofits: $472 million. In what some have called the equivalent of beer companies’ don’t-drink-and-drive campaign, financial firms spend $31 million to educate their customers about general money issues.

Officials at the bureau made no effort to gauge the effectiveness of financial education campaigns. They declined to comment on whether they expect more of an education effort from financial firms, which spend so much selling their goods and services to customers who are often unprepared and unsuspecting.

Most of the marketing dollars–$12 billion a year—are spent online, on TV and radio, in newspapers and through the mail in a direct attempt to move customers to make an immediate purchase, the bureau reported. The rest is spent in general awareness campaigns mostly highlighting credit cards, mortgages and other types of loans. “Consumers are seeing financial marketing everywhere they turn—online, in their mailbox, and in their family room on the television,” Cordray said. “This is truly a barrage of marketing.”

There is little chance we’ll ever spend as much educating the public as financial marketers spend selling to the public. And given this barrage, critics say the little spending we commit to financial education is a waste of money. Products and markets change too fast and most people only remember the last thing they heard—likely to be an ad from a bank.

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Yet this view probably sells short the average consumer, who is beginning to understand what’s at stake and is taking an interest in his or her own financial future. This is especially true of young adults, where awareness is most important. Two in three Millennials are committed to or have the ambition to save for retirement, according to a recent report from the Transamerica Center for Retirement Studies. Other studies show that young workers are most aware of what it takes to build a nest egg. If young people latch on to the need for greater financial awareness we’ll have the start of a true long-term fix for our cultural financial illiteracy.

The federal government has developed a useful set of websites to help individuals who want to help themselves in the fight against financial marketing:,, askCFPB and Paying for College. The only way to win against hard-selling financial firms is to arm yourself with information.