I am proud to be Co-Chair and Co-Founder of the Financial and Economic Literacy Caucus (FELC) in the U.S. House of Representatives. In 2005, former Congresswoman Judy Biggert and I joined forces to found the first Congressional caucus devoted to furthering financial literacy for all Americans. Over the years, FELC has supported legislation, hosted briefings, and engaged federal agencies on promoting financial literacy at all levels of policy. I am happy to have Congressman Steve Stivers of Ohio, as the new Co-Chair for our Caucus. We share a belief in the power of financial literacy to decrease inequality and increase financial stability and hope for one’s future.
Congressman Stivers and I also share a belief that federal financial literacy efforts should be better coordinated; redundancies should be eliminated and communication with the critical non-governmental organizations should be optimized. As a senior member of the House Financial Services Committee, I am proud to have influenced the 2003 FACT Act which created the Financial Literacy and Education Commission. The Commission represents 21 federal agencies and has a mission to streamline federal financial literacy policy. The Congressionally-mandated website of the Commission, www.mymoney.gov, brings together resources across the agencies for consumers, teachers, and parents. It is critical for consumers to have a one-stop-shop for all of the varied financial resources that the federal government has to offer.
Over my many years as an advocate for financial literacy, I have had thousands of conversations with policymakers, students, and practitioners. The financial conversation that influenced me the most, however, was with my father when I was a boy of eight or nine years. After receiving a small allowance, my father brought me to our local community bank to open an account. He told me that the bank would hold my money safely and help to make it grow. That lesson impacted the rest of my life, and to this day, I am a supporter of financial literacy for youth and the involvement of the family. Too often, as parents, we engage our children about safe driving, excelling in school, and obeying a curfew, but not about what constitutes “wants” and “needs.” When we involve our children in crafting a budget and discerning the best deal in the grocery store, we impart those lessons for life. One of the resources developed by the President’s Advisory Council on Financial Capability, “Money As You Grow“, is a great place to start for parents looking for age-appropriate topics and activities to impart life-long financial lessons.
Make sure to open a bank account for the children in your life, and involve them in managing it. Studies show that financial literacy is reinforced and makes an impact on behavior when paired with a savings product. Even better than a basic bank account would be a Roth IRA, so that your children learn lessons of lifetime savings and the essential idea of compound interest. However, at the moment, for a young person to have a Roth IRA, they would need to have a job. That’s why I recently introduced the Roth Accounts for Youth Savings Act – or RAYS Act – which would eliminate the need for earned income to open a Roth IRA for your kids.
Financial literacy rates have been stubbornly low for far too long. I believe that our aversion to financial discussions with our loved ones is partly to blame. This Financial Literacy Month, I encourage you to learn something new about finances and then to teach it to a young person. The first step to improving our financial situation, both at the family and national level, is to talk about it.