Benjamin Franklin said, “An Investment in knowledge pays the best interest.” Richard Cordray, director of the Consumer Financial Protection Bureau (CFPB), furthered this sentiment with bankers at the American Bankers Association’s annual convention on Monday, when he told bankers to “push for financial education for young people at the state level in order to bring up a new generation of responsible borrowers.”
This is all well and good, but how many times do speakers stand up in front of a crowd and inspire them, yet only give very general and unspecific solutions? I would say most of the time. Here, Cordray went on to say that, according to a recent article by Philip Ryan, an Associate Editor of Bank Innovation; “Financial responsibility, fostered by education, is far better. Bankers should realize, however, that not all participants in the financial system will receive financial education in the home, and that, therefore, an effort must be made to get this education into the schools so that young people learn the virtues of saving and responsible borrowing early in life.” This may still seem general and unspecific, but it’s a start. The solution lies within the commitment of the banks.
There is a very specific solution, but it only comes from consistent action. At Brass we have one such solution; the Brass Student Program, but don’t think we are the only one. If anything it serves as an example of a program that works by creating a stronger relationship between the bank and local high schools. When looking into other programs or when you are looking to create one yourself, make sure you understand that, for a bank, there are NO SHORTCUTS to being involved yourself. This is not like doing a home project yourself to save money. Curing this problem comes down to relationship building, something that was stressed every hour of every day when I was a banker. I think millennials are starving for banks to put in more authentic time with them to foster a relationship and to help them with money, as seen in this short case study of 6 young adults.
American Author Napoleon Hill once said, “It takes half your life before you discover life is a do-it-yourself project. ” So if you, as a bank, are really serious about relationships, make sure the only shortcut you take is not waiting half your life before realizing the obvious…with help of course.
November 6, 2013 at 3:08 pm
Dear Mr. Andresen, thank you for advocating for financial education rather than financial literacy. The former term is helpful and empowering, whilst the latter is insulting and dis-empowering. Ideally, both camps can & will move towards using the term financial capability, which seeks to help all people make the best use of all the financial resources at their disposal.
January 10, 2014 at 6:04 pm
I couldn’t agree more. While I hate playing the semantic game at times, telling someone they are not financially literate never goes over well and certainly does not help them along on their journey for better financial education.