Starting Young Key to Financial Literacy, Says Presidential Panel (July 7, 2015)
Equipping young Americans with the knowledge they need to make smart financial decisions should start as early as pre-kindergarten, according to a new report from a group of experts tasked with finding ways to promote financial capability among the young. Created by a 2013 executive order from President Obama, the President’s Advisory Council on Financial Capability for Young Americans last week delivered its final report to the president and Treasury Secretary Jacob Lew.
Starting young is among the council’s key recommendations, but it’s also suggesting further guidance from regulators. The report cites research that financial education administered to students as young as elementary school-age can have a “meaningful impact on financial knowledge.” The report also calls on federal financial institution supervisory agencies, through the Financial Literacy and Education Commission (FLEC), to offer additional guidance on the regulatory landscape that impacts access to checking and savings accounts for young people, specifically those between ages 14 to 18. Guidance on product features and account opening practices that promote safe and affordable checking, savings and prepaid accounts for young people is needed, along with clarifications on regulations concerning the opening of noncustodial transactional accounts (checking and prepaid) for youth under age 18, according to the council.
Promoting direct deposit to high-quality demand deposit and prepaid accounts also would be an effective way to leverage municipal summer jobs programs for youth financial inclusion, the report suggests. But the onus for spreading financial literacy shouldn’t fall on educators and the government alone, according to the report. The private sector has a major role to play. “[W]e must encourage financial service companies, local businesses, nonprofit providers, foundations and other professionals to foster partnerships with schools to strengthen learning opportunities and provide mentors and role models for children,” wrote John Rogers, chairman of the council and CEO of Ariel Investments, in a letter to President Obama and Secretary Lew.