Proposal: Financial Literacy Centers Across the U.S.

This is a modest proposal and actually may not be very original. But this is a very important topic that is not getting enough attention. This proposal could be implemented easily and quickly if it had the right partners.

Our financial system offers many options for people to save, invest and obtain credit. But having all these options is not necessarily a good thing. These increased options have also added more complexity to a financial system that was already pretty intimidating for many people. Many of us do not have a basic understanding or knowledge about finance to make good financial decisions for ourselves. Studies have shown that this financial "illiteracy" is widespread across the U.S.

A lack of understanding of basic financial concepts has been linked to a lack of retirement planning and bad borrowing habits. Financial illiteracy can lead to people not only making poor financial decisions it makes people vulnerable to predatory practices such as predatory home lending, payday loans and other financial scams. Financial literacy is an essential life skill.

Since financial literacy is such an important life skill, access to learning basic financial skills (such as balancing check, monthly budgeting and understanding loan terms) should be free and broad. Actually, this proposal would provide an excellent marketing opportunity for credit unions across the country - an opportunity to expand credit union membership.

The proposal: National Financial Literacy Centers

1) These centers would provide a basic financial skills curriculum plus additional classes covering specific topics such as investing in stocks, bonds or real estate or home ownership.

2) Teachers for these classes could be retired volunteers or unemployed college students (which would require some training) or unemployed financial industry people. Maybe, we could use some stimulus money to pay these teachers.

Credit unions would be the ideal partner in this public-private partnership because of their membership structure and not-for-profit status.

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Comments

Have you ever heard of the

Worker's Educational Association?

It was started in the UK at the turn of the 20th century in order to provide opportunities for adult education. Participants can take a number of courses ranging from lacemaking or carpentry to medieval history. I think that real effort to provide adult education, and in particular economic and political education so that people can understand what a CDO is and how it destroyed the economy would be a powerful tool in fighting back against the neo-libs.

For many years local central labor halls did provide social services of this sort. But over the years unions have lost this social movement aspect, and become more focused on a strictly business unionism model.

Reviving social movement unionism could do a lot to counter the decline of the working class. And, with new technologies there are many opportunities that never existed before. The key is making people aware of how they are being screwed.

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No but thank you for sharing that.

You make an excellent point about unionism and social movement. It is definitely something unions should revisit especially as a matter of public relations.

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free classes, tests

I think there should be a test and class, similar to driving school. Say someone gets into bankruptcy due to financial illiteracy, the judge could order them to personal finance school.

Or have it like a driving test, in order to get a mortgage you must have your financial school certification and have it be online, such a quiz, so getting certified is as easy as possible and doesn't add more "red tape".

A class should also be required in high school to graduate.

Right now we have predators running ads to "help" with mortagages to credit cards on TV. These "groups" should be shut down, anyone claiming to be a "financial adviser" needs to be certified and all of this could go under the consumer financial protection agency.

I mean when it comes to white collar rip offs it's clear anything goes, just don't rob people the old fashioned way, only then does someone go to jail.

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In a past life.

In a past life, I created a program that involved a partnership between a large city government - city college system and banks. It targeted a large group of people who were "unbanked". People who were participating in our economy because they were employed and were purchasing stuff but didn't have bank accounts (usually because banks require credit checks to open checking accounts). People who are "unbanked" usually do their "banking" through currency exchanges or even worse payday lenders.

The program was based on a curriculum developed by the Federal Reserve Bank of Chicago. It was free to city residents. It was a 6 week program and upon successful completion (attend all 6 classes and pass exams) a person would receive a certificate of completion. The person could take this certificate of completion to a participating bank and open a checking account without a credit check.

So, all the things you stated certainly are doable with Financial Literacy Centers.

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a credit check?

Really? I opened up a brokerage account without a credit check. I didn't want any margin. If someone ran a credit check on opening up some free checking account that's beyond my awareness but I know the brokerage account didn't do it.

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Financial Literacy for

This proposal seems suspiciously redundant given the widespread availability of high-schools, community colleges, libraries, churches, community centers, books, on-line resources, etc. that can provide basic financial skills, investing information, and home purchasing guidance for free or as part of a credentialed program.

Also odd is the description of the purchasing of a home (or, more accurately for most people, the acquisition of debt to rent a structure or apartment for 30 years) as investing. This marketing technique undergirds all housing bubbles. Paying on a loan for shelter does not produce capital. At best, a mortgage is a long-term savings plan that relies on the phenomenon of asset inflation, a serious symptom of a poor investment environment and falling currency value.

In any case, I hope some readers ponder how all those professional investors, including large public and private funds, could have blindly invested and lost with B. Madoff, Allen Stanford, Christopher Stanford, Anthony Vassallo, Kenneth Kenitzer, etc. despite having sophisticated financial skills and investment experience. Basic financial skills are no match for real estate and Wall Street cons who use fraud, public relations, marketing, lobbying and high speed computers to game the political and financial systems for the elite few.

As icing on the cake, R-Capitalist then nobly suggests that we use taxpayer money to fund these centers which, coincidentally, will be staffed (and managed) by people such an unemployed financial industry types. I've heard this message more than a few times this year. It seems to be nothing more than the latest, faux-populist marketing ploy cooked up by unemployed or underemployed opportunists from the flagging financial industry / real estate / insurance (FIRE) sector to again fleece the shmuckdom using greed and fear. You guys & gals are such innovators!

Perhaps I should be more sympathetic. After all, why should the unemployed from the FIRE sector not feel entitled to heed the clarion calls from elected officials and regulators to hurry and pilfer from the public? Their employed brethren have left little in the public purse.

But, in case the ex-FIRE sector employees arrive after the public cupboard has been picked bare, let us hope they don’t despair. Just maybe they can dream up a new proposal. And maybe they next one will involve developing a viable, sustainable business plan that does not rely on either government subsidies or Ponzi schemes.

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Firstly.

You don't know jack shit about who I am. So before you go off and pull out some bullshit about FIRE think about that.

However, having said that. Financial illiteracy is a big problem is this country. If people knew how screwed up our financial/economic system maybe there would be more accountability.

Just like any great "freethinker" it is best to utilize the resources that are currently available such as the one you much mention in the first paragraph. Than you for your input in that regard.

RebelCapitalist.com - Financial Information for the Rest of Us.

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Free is worth what you pay for

"This proposal seems suspiciously redundant given the widespread availability of high-schools, community colleges, libraries, churches, community centers, books, on-line resources, etc. that can provide basic financial skills, investing information, and home purchasing guidance for free or as part of a credentialed program."

I went through all of those programs- and still ended up having to dig myself out of $60,000 in debt when I hit rock bottom a decade ago.

I agree with you that the anonymous nature of the market is a bit of an information firewall for investors. But a larger problem is a culture of debt; an unspoken expectation that going into debt for investment in one's lifestyle, as opposed to investment in a business, is worth it in the long run.

It is NEVER ok to borrow for lifestyle alone; the costs of life come and go. One should only borrow for assets that are directly producing MONEY- and more money than the cost of borrowing for that asset.

That's a rule that none of the high school, community colleges, libraries, churches, and banks will never teach you.
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Maximum jobs, not maximum profits.

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Maximum jobs, not maximum profits.

need to KNOW what each decision COSTS you

I gotta run and do errands, so, this is just a real quick comment.

for example - I figured out that my health 'benefits' cost 819 a month from my paycheck.

to pay for that outta my pocket, with 25% going in taxes

.75x = 819, x = 1092, x = what I need to EARN a month.

1092 * 12 = 13104 a year,

now, we ALL need to get paid for 52 weeks of work a year, whether you're paid by week, bi-weekly, bi-monthly, or monthly. BTW, staffing is based upon 40 hours a week.

40*52 = 2080.

13104/2080 = $6.30 an hour I need to make, workign a whole year, JUST to pay MY health insurance.

EVERY workign stiff in America should be able to figure that out. Few can, fewer do, and we all get fucked by those who can figure it out AND DO figure it out.

rmm.

Yond Cassius has a lean and hungry look;
He thinks too much: such men are dangerous

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Yond Cassius has a lean and hungry look;
He thinks too much: such men are dangerous