CFPB Director Richard Cordray said at a hearing last week that financial education in the U.S. should be as fundamental as the education students receive in history and government.
“Within the framework of our republic, we have built the greatest system of economic liberty in the history of mankind,” Cordray said at the hearing on financial education held at the University of Wisconsin-Madison. “Yet it will only endure if we take the steps necessary to strengthen that system from the bottom up, starting with the individual. The financial services marketplace is constantly evolving in complex ways, and managing one’s finances is a lifelong endeavor.”
Cordray stressed early education for children, who he says form their financial identities at an early age, but he added that money and finances can often be a taboo subject for some families.
“Moreover, the vast majority of parents have little background in these matters, other than what they have derived from their own sometimes difficult experiences, and they lack the confidence to impart lessons to anyone else,” Cordray said. “Whenever I have been involved in financial education programs in the classroom, invariably we hear later from some children that their parents wondered where they could find similar lessons for themselves.”
Cordray also said failure to teach children financial fundamentals “condemns” them to the “school of hard knocks,” adding that it is “unconscionable and indefensible that we seem so content to do a lousy job on these matters of such undeniable importance.”
Cordray pointed to an agency report that examined how to integrate financial education into K-12 education, saying that financial education should be integrated into education in math, English and social studies.
Additionally, the report suggested incorporating financial concepts into statewide standardized testing already administered.
“Experiential learning can be a very effective way to approach financial education with the young people of this generation,” Cordray said. “To borrow a phrase we will be using along this spectrum, young people need to be convinced of the importance of ‘friending your future self,’ by making sound and sustainable financial decisions that they can live with over time.”