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Empowerment through personal finance education: #FinLitSummit 2017

5 students in a classroom learning about personal finance
April 14, 2017

By Pam Leibfried

Our Money Mentor team spent an inspirational morning attending the 2017 Financial Literacy Summit at the Federal Reserve Bank of Chicago this past week. This annual event, co-sponsored by Visa and the Chicago Fed, had a theme of Overcoming Barriers to Universal Financial Education.

In addition to a demonstration of the Professor Q personal finance education magic show, the FinLit Summit included four panel discussions with personal finance experts from around the world, including Alliant’s own CEO, David W. Mooney.

Below are a few of the ideas and opinions that most resonated with our team members.

Talk about money more

Money cannot be a taboo subject. The fact that many people don’t like to talk about money was mentioned by several panelists as an obstacle to improving financial literacy. This discomfort may also be a contributing factor to the lack of universal financial education in schools. In the U.S., only 20% of students leave high school having studied personal finance.

Helping parents is key. Russia has developed special materials for parents, to empower them to teach kids about money because they’ve found that most families don’t talk about money except in the context of post-purchase questions like “Why did you spend so much?”

Make money talk routine. Gigi Hyland, executive director of the National Credit Union Foundation, recommends talking to kids about money regularly – as you shop, as you pay bills, as they plan their own spending. If you talk about money more, you’ll “help kids understand how their spending impacts the family budget.”

Kids care about money. Discussing his experiences teaching financial literacy to area teens, Alliant President & CEO David W. Mooney made the point that kids are ready and willing to talk about personal finance:  “It’s not hard to engage kids. They are interested in money!”

Alliant CEO David W. Mooney speaks at 2017 FinLit Summit
Alliant President & CEO David Mooney makes a point during a #FinLitSummit panel at the Federal Reserve Bank of Chicago.

Social media. Panelists feel that technology and social media may be helping to change negative attitudes about money discussions. Social media and review sites were specifically called out as channels for public discussions about money and financial institutions. Emre Önyurt, executive vice chairman of the Capital Markets Board of Turkey, summarized it succinctly: “People like to share their experiences…through social media.”

Keys to financial success

Needs vs wants. Panelists were asked what text message they would send to a high-schooler. Alliant CEO Mooney’s response summarizes one of the key messages in the personal finance curriculum that Dave and Alliant’s other volunteers teach: “Before you spend, you should ask yourself if it’s a need or a want.”

Pay yourself first. USAA’s VP of Savings Assurance, Vikram Parekh, answered the question by quoting one of his personal finance heroes, Warren Buffet: “Rather than saving what is left after spending, you should spend what is left after saving.”

Paying off student loans. In discussing the student loan default crisis, Moneythink’s Cofounder and CEO Ted Gonder talked about studies showing that the more debt you have leaving college, the more likely you are to pay. Why? Because you likely graduated. People who drop out are four times more likely to default on their student loans.

Success in college. A contributing factor to high drop-out rates of college students who are less economically advantaged is that they don’t know who to reach out to for help. There is a lack of awareness of available emergency grants that could help them stay in school. Many also aren’t in touch with financial aid office staff who might be able to help them.

The financial gender gap

A financial oxygen mask. Making it a priority to educate yourself about money if you are a mom was compared to pre-flight instructions to secure your own oxygen mask in case of an emergency. You have to take care of yourself financially first before you can model good finances for other family members.

GDP impact of empowered women. Financial literacy and economic empowerment for women isn’t just “nice” to have. It is necessary for the improvement of society and communities, and contributes greatly to the growth of GDP and local economies. In fact, Dr. Denise Raquel Dunning, founder and executive director of Rise Up, stated that fully involving women in the economy could have a $12 trillion economic impact.

Unconscious biases. Women in many cultures and industries still face negative messages and unconscious biases about wanting to work and make money.

Changing attitudes. Dr. Tracey Wilen, visiting scholar at Stanford’s Media X Program, talked about the profound change in attitudes about women and money across generations.

  • Women of the Greatest and Silent generations were more likely to manage the family and home, but not manage the family finances or earn money of their own.
  • Younger women, on the other hand, start from day one knowing that the onus is on them to make good financial choices about jobs, savings, etc.

The gender confidence gap. Dr. Anna Zelentsova, strategic coordinator of a finlit program run by the World Bank and Russia’s Ministry of Finance, talked about research on women’s confidence about money. Studies have shown that men, even when they only know a little about a financial topic, will say that they know about it, while “women say truly that they don’t know something” or tend to underestimate their knowledge. We’ve written about this so-called “confidence gap” in the past, and offered tips on how to close the gender confidence gap.

Financial literacy and technology

Infrastructure enables access. For fintech to impact people’s financial lives positively, “infrastructure, and access to infrastructure, is necessary,” according to Vanessa Rubio Márquez, deputy secretary of finance and public credit, Ministry of Finance and Public Credit of Mexico. The expansion of 4G coverage in the developing world was a factor mentioned by multiple panelists, and former FCC commissioner Jessica Rosenworcel pointed out that 34 million consumers in America still don’t have access to broadband.

Lecture or discuss? Financial content is now available online, but people need to want to use it. Get Set Learning’s CEO Karan Goel talked about two models of sharing information – the cathedral vs the bazaar. The cathedral model uses more top-down, authoritative lectures, whereas the bazaar model is more open, with peer discussions and sharing of personal experiences, like in online ratings. Gonder chimed in that we need to “move past a lecture-based model of financial education that has proven ineffective.”

Digital has truly gone global. The increase in digital transactions isn’t a phenomenon limited to the U.S. Tymofiy Mylovanov, the deputy chairman of the council of the National Bank of Ukraine, said that in the past few years, “the amount of cash I need to carry in my wallet moved from about 95% to about 5%. Today, I essentially use cards, except for small items or tips.”

Visa Professor Q teaches financial literacy at 2017 #FinLitSummit
Visa’s Professor Q team demonstrates personal finance themes via magic at the 2017 #FinLitSummit.

Global Financial Education

Economic transitions in Ukraine. Tymofiy Mylovanov, the deputy chairman of the council of the National Bank of Ukraine, explained the unique challenges facing Ukrainian citizens related to post-Soviet changes in the level of economic control exerted by their government.

  • People now have to save for their own retirements because government pensions have been cut, so they need to be educated on how to accumulate and manage retirement savings.
  • The government has eased up on its control of currency exchange rates, so financial educators are emphasizing that fluctuating currency exchange rates are their new reality.

Money Week 2017: #FinLitSummit at Federal Reserve Bank of Chicago
Banners fly outside the Federal Reserve Bank of Chicago for the Financial Literacy Summit 2017, #FinLitSummit

Pam Leibfried is a marketing content specialist whose love of words led to a writing and editing career. After a brief stint teaching English, she transitioned to corporate communications and spent 20 years at The Nielsen Company before joining Alliant’s content development team. Early in her work life, Pam’s friend Matt explained the benefits of a 401(k) and her dad encouraged her to start a Roth IRA. Their good counsel prompted her to prioritize retirement savings, which just might enable her to retire early so she can read more and live out the slogan on her fave T-shirt:  “I have a retirement plan: I plan on quilting.”   

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