Editor’s note: This op-ed is by John Zenie, a former state legislator and a member of the Colchester School Board.
As a result of the recent recession one of the actions taken by the US Congress was to pass a bill to set up the Consumer Financial Protection Bureau as part of the Federal Reserve System. This new bureau will oversee financial institutions that provide services such mortgages, banking accounts, plus more. This bureau is given the power to make and enforce rules to prevent rip-offs and scams. Exactly how this bureau will operate is still unclear. There is political movement to require oversight of this new bureau so we would have an overseer of the oversight bureau. Hmm..mm
There are over 20 states that have some type of an educational requirement of financial literacy. Vermont is not one of those states.
Most people would agree that consumer protection is important but this latest attempt to improve protection looks to be expensive and ineffective. In our zeal to protect consumers we often forget to bolster our greatest protector of fraud which is the educated consumer. If more consumers knew the difference between a good deal and a bad deal there would be much less need for government consumer protection agencies. An educated consumer is one who is literate in personal finance which includes consumer math and personal money management.
There was a time when being a consumer was simpler. There were fewer products and services to choose from and at certain times in our history a handshake was all that was needed for both the seller and buyer to feel confident. With the advent of businesses wanting to provide more options to appease consumer demand it brought about more choices thus requiring the consumer to be more knowledgeable so that they can make informed choices for themselves.
Along with the increased choices by ethical businesses there also came to be some unethical businesses that preyed on the undereducated consumer with deals that resulted in personal financial losses. Then came consumer protection services both public and private. Consumer Union, which publishes Consumer Reports, came to be a voice to help advocate for the consumer and to also help educate the consumer. But products and services have become so numerous and complex and ever changing that it is near impossible for any agency to be as effective as we would like them to be in providing consumer protection.
The educated consumer is the best defense against financial losses and there are several groups in Vermont who are working to empower the consumer. The national Jump$tart Coalition is working to “improve the financial literacy for per-kindergarten through college age youth..” Vermont Jump$tart with partnerships from local banks, Vermont State Treasurer’s Office, and others, is working to bring financial literacy to our schools. A recent announcement was made for the Center for Financial Literacy at Champlain College which will help strengthen the movement for financial literacy in Vermont and elsewhere.
As our state goes forward with educational goals such as increasing our graduation rates and increasing the aspirations of students to attend post-secondary schools we should also add in the need for our students to have life-ready skills which include financial literacy. Regardless of what scholastic education achievements are attained by the students and regardless if they make $20,000 a year or $200,000 a year, when they leave school they must be able to manage themselves financially to be successful. Financial ruin spans all income classes.
There are over 20 states that have some type of an educational requirement of financial literacy. Vermont is not one of those states but with the support of the State Treasurer’s Office and Vermont Jump$tart we can do even more by helping educational curriculum developers and teachers to bring financial literacy to the Vermont classroom.
Investments in education benefits everyone and these investments needs to include financial literacy education, even in this time of tight budgets.
