Arming today’s youth with greater financial knowledge is the key to making sure there is no repeat of the housing and economic crisis, Richard Cordray, director of the Consumer Financial Protection Bureau, said at a meeting Monday of the President’s Advisory Council for Financial Capability for Young Americans.
“Now more than ever, as we emerge from the deepest financial and economic crisis of our lifetimes, people need the know-how to manage the ways and means of their lives,” Cordray said. “The choices they face in the financial marketplace, with instruments like mortgages, credit cards, auto loans, student loans, credit reporting, and more, are increasingly complex.”
He says childhood education is crucial to shaping housing’s future and should include:
- Financial education: Cordray said that financial education needs to begin at a young age, with the benefits of compound interest being taught in math classes; economic costs and risks in social studies classes; and overall curriculum involving how to use and protect money.
- Experimental learning: Cordray said that financial management should be practiced through experimental learning, whether that’s through simulating a banking experience or a computer game that teaches financial skills.
- Integration into standardized tests: Financial education concepts should be integrated into standardized tests, which would then make it more of an incentive for more teachers to teach such concepts, Cordray said.
- Parent involvement: “Parents help set expectations, and research has shown that if parents engage their children by establishing a savings account for them, these children are seven times more likely to attend college than those without a savings account,” Cordray said.
Source: “5 Ways Children Hold the Key to Housing’s Future,” HousingWire (March 10, 2014)