By Mike Corn
A report released from the CFPB in November highlights the disparity in the amount of funds spent on financial education for consumers as opposed to that spent in marketing financial products to them.
In total, approximately $670 million was spent on financial education last year. Of that amount, the federal government spent $130 million, financial institutions spent $31 million and non-profit organizations spent $472 million.
Those seem like big numbers until you look at the amount financial institutions spent on marketing and advertising their consumer financial products. Annually, this is estimated at $17 billion, or more than 25 times as much as that spent on financial education.
With the U.S. population at 314 million, that means we’re spending just over $2 a person to educate consumers on financial products and just over $54 a person to convince them to buy those products. No wonder consumers can feel overwhelmed and end up making decisions that aren’t in their best interest.
Since their inception, credit unions have placed a priority on education for their members. In fact, it’s fifth among the 7 Cooperative Principles adopted by cooperatives all over the world. Credit unions are doing their part: reaching out with home-buying seminars, with tips on how to repair credit and with ongoing assistance to help members understand their financial options. Credit unions also play a big role in youth financial education, partnering with schools to guide young people toward money-management skills they need.continue reading »