Elizabeth A Duke: The importance of financial education
Speech by Ms Elizabeth A Duke, Member of the Board of Governors of the Federal Reserve
System, at the Jump$tart Coalition Investing in Our Future: Financial Education and
Washington Event, Washington DC, 8 April 2010.
* * *
Good morning. I am pleased to be here with the Greater Washington chapter of the
Jump$tart Coalition for Personal Finance to kick off Financial Literacy Month 2010. And I
would like to take this opportunity to applaud each of you here today for your commitment to
revitalizing the Washington chapter.
The coalition is a national leader among organizations that work to improve financial
education for students from kindergarten through college. Its programs provide students with
the knowledge and skills they need to make informed decisions that will have a positive
impact on their economic well-being. With a new leadership team and renewed enthusiasm,
the Greater Washington, D.C., chapter of the coalition has joined forces with more than
100 individuals, businesses, and not-for-profit educational and government organizations -
including the Federal Reserve Board - to increase knowledge about personal finance among
students in our region.
The Federal Reserve System is made up of the Board of Governors here in Washington and
12 regional Federal Reserve Banks with branches across the country. Throughout the
Federal Reserve System, we work with the Jump$tart Coalition - locally with the
Washington, D.C., chapter and through alliances between the Reserve Banks and other
state chapters of the coalition - to achieve our shared goals. The partnership between the
Federal Reserve and the Jump$tart Coalition is a natural one. Jump$tart's mission to
develop a more financially literate population supports the Federal Reserve's goal of a stable
and growing economy. In collaboration with partners like you, Jump$tart enables students to
make economically sound financial decisions in their personal and business lives. As
students individually form households or start businesses, their collective decisions will
shape the economy of our future.
I am especially pleased to be able to represent the Federal Reserve in this effort as my
personal commitment to financial literacy has spanned more than 30 years. I have been
involved with a number of initiatives including some that took me into the classroom to teach
students directly and others that provided teachers with tools and training to better prepare
them to teach economics and personal finance. The need in this country for financial
education is so great that we must continue to tackle it at all levels and with all available
resources. We need to imbed financial concepts in every K-12 curriculum in the country.
While physical education and even driver education are part of nearly every curriculum,
financial education is mandated by only a handful of states as a requirement for graduation.
Alongside classes that prepare students to join the workforce we need courses that
demonstrate how to use the financial compensation from their work to meet family
necessities and build personal wealth in an era of complex financial products. Students will
need to identify situations in which it makes sense to borrow and choose among loan
products. They need to know how to budget and save and how to select the best investment
vehicles for their savings. And as the recent financial turmoil has taught us, they must
understand how to prepare for and deal with financial contingencies such as unemployment
or unexpected expenses. Jump$tart supports efforts to provide such an education.
The Federal Reserve is working on several fronts to promote financial education that will help
prepare young people to take on the responsibilities of market participants and manage the
risks that come with the opportunities to spend, save, borrow, and invest. Financial education
that begins at a young age and extends through one's life is the most effective preparation
for making important financial decisions such as buying a car, purchasing a home, saving for
retirement, borrowing for postsecondary education, and even choosing a career. In support
of our efforts, the Reserve Banks have developed programming and curriculum to serve the
needs of schools, educators, and students. Among them are:

Katrina's Classroom, a free video-based curriculum developed by the Federal
Reserve Bank of Atlanta that uses the stories of victims of Hurricane Katrina to
teach middle school and high school students and their parents the importance of
being financially prepared;

Great Minds Think: A Kid's Guide to Money, a publication developed by the
Federal Reserve Bank of Cleveland that helps families begin conversations about
money; and

several essay and creative writing contests for students sponsored throughout the
Federal Reserve System, designed to promote students' development of savings
goals or encouraging them to apply economic thinking to a social problem.
In addition to providing materials for financial education, the Federal Reserve has also begun
to assess the effectiveness of the education programs it engages in, so that we can better
evaluate the outcomes of our efforts. This research is intended to help us better answer the
question, "What works in education?" so that we may allocate our resources in the best
possible manner.
While financial education is an important first step in enabling consumers to make informed
financial decisions, it is also important that consumers be presented with clear and consistent
information about their financial products. The Federal Reserve is the primary government
agency charged with writing rules governing consumer financial products. Historically, we
have focused on disclosure as the best way to provide consumers with information to choose
between products or to make decisions about using financial products. In recent years, we
have used extensive consumer testing to gauge consumers' understanding of financial
disclosures and to highlight practices that simply cannot be understood by consumers even
with the best disclosures. If we identify practices that cannot be adequately explained
through disclosure, we now prohibit those practices. Recently, the Federal Reserve has
written strong new consumer protection rules for mortgages, credit cards, and overdraft
charges. And we have improved our response time for drafting rules to address emerging
trends that may pose new risks for consumers.
In closing, I would like to thank the educators here today for your dedication to
Washingtonarea students. Your role is vital to preparing them with the skills they will need to grow into
financially successful adults. I am pleased to be a part of this conversation among the private
and public sectors, as well as the education community, about how best to empower
students with the confidence and savvy to navigate their financial worlds.