The Independent Bankers Association of Texas Education Foundation teamed with the Texas Bankers Foundation to sponsor the fourth annual Financial Literacy Summit at the Federal Reserve Bank of Dallas on July 21-22.
Willard Still, IBAT Foundation Chairman, said financial literacy is crucial in today’s economic climate.
“Texas has the lowest credit scores in the country and we rank 44th in home ownership. We need to make sure our young people have a better understanding of what they are doing financially,” he said.
Willard noted that community banks are leading these efforts.
“Do you know why there will always be community banks?” he asked. “We do it because we care.”
Texas Banking Commissioner Charles Cooper encouraged attendees to provide financial literacy in their communities.
“If you are an old pro representing your community, I challenge you to continue to do that and to enhance your program. If not, start a program. Why? Do it for your community because it’s the right thing to do and it makes good business sense,” he said.
One woman’s family financial crisis led to the creation of a financial literacy textbook, recently adopted by the Texas Education Agency (TEA). Mandy Williams and Tina Pennington, sisters and authors of Red + Black: What I Learned About Life When My Husband Got Fired! opened the general session. They launched their textbook in a KIPP charter school in Houston, fine-tuning their curriculum and ultimately achieving approval from the TEA for the book to be adopted by high schools across the state for financial literacy instruction.
Williams identified the foundations of financial literacy: “Your values and priorities drive your decisions….If you don’t teach how to save, you can’t play the stock market….Using a credit card is like taking out a loan….If I don’t spend the money today, I’ll have the money for something I want or need in the future.”
A panel of consumer credit experts warned against companies masquerading as nonprofit credit counselors. How does the consumer know which credit counselors are credible and which are sharks?
“We don’t fix credit; we educate,” said Bill Langley with Money Management International (MMI) of Fort Worth. He said the majority of complaints made to the Better Business Bureau are for credit counseling services. MMI helps consumers trim expenses, develop a spending plan and repay debt. A true nonprofit, MMI offers 24/7 credit counseling.
Todd Mark with Consumer Credit Counseling Service of Greater Dallas said, “We are like a financial ministry.” Mark said his organization’s goal is educating and empowering consumers about financial literacy by providing a wide range of services, including live Webinar-based seminars and financial literacy instruction at college freshman orientation.
Tom Butler of GreenPath Debt Solutions said financial literacy education has proven benefits. He cited studies from 2002 and 2006 that showed a positive impact from financial counseling leading to a lower delinquency rate, and a 2009 study that revealed the positive impact of interest rate reduction for consumers seeking credit counseling.
“The Home Preservation Foundation helps consumers avoid foreclosure,” he said. “HPF has fielded more than five million calls since 2007 and counseled more than one million people.”
Unemployment and underemployment are cited by 70 percent of those seeking credit counseling, and 70 percent of counseled homeowners are able to avoid foreclosure.
“Concessions of friendly creditors do have a positive impact,” he said.
Despite the recession, calls for credit counseling are down, and experts blame financial fatigue. People may be giving up without realizing the wealth of resources available to them. June 2011 had the highest rate of bankruptcy filings since the law changed, but people need to explore options before filing for bankruptcy.
After presentations about the value of financial counseling, speakers offered ideas on how to implement these financial literacy programs locally.
In the session on community partnerships, panelists talked about the importance of collaboration among local agencies and community groups.
Rachel Rosas-Miner of Guaranty Bond Bank in Mount Pleasant said her bank uses the FDIC Money Smart Program, available free and in English and Spanish.
“Get your management involved and prepared because this program requires time and resources,” she said. “You will need to budget for this program and be prepared to spend time after normal working hours.”
Panelist James Shaw of Southside Bank in Tyler discussed his bank’s use of the Kidz® Bank program, which provides instruction in financial literacy and establishes savings accounts for grade school students.
“One year the student president of Kidz® Bank’s mother had been in the penitentiary. She told us that her child’s participation in Kidz® Bank helped change her life,” he said.
Shaw credited his volunteerism with the East Texas Workforce Board as an opportunity to identify opportunities for teaching financial literacy.
Lueretha J. Slack of Comerica Bank in Dallas described her bank’s involvement with the Community Reinvestment Act and efforts to assist residents at a homeless mission in the Dallas/Fort Worth area by providing a nine-week course about financial literacy. The program warns participants about credit repair scams and payday loans, and assists with issues of identity theft and IRS problems.
Mary Lange, president of the IBAT Education Foundation, moderated a panel on best practices and new resources available for instruction in financial literacy.
Lange pointed out that more than one million programs are available for teaching financial fitness. Choosing the best fit for your constituents means filtering through the options.
“We encourage exploration and experimentation, but we are also sensitive to overload,” she said. “Our goal is to build awareness of quality programs.”
Wearing a bright lemonade-yellow shirt, Amanda Stephens of Killeen’s First National Bank talked about the successful Lemonade Day event her bank sponsored. She said her bank benefited from the event by achieving positive public relations and Community Reinvestment Act credit.
“This year Lemonade Day fell on the weekend of the Royal Wedding and the announcement about Osama bin Laden,” Stephens said. “We still received good publicity.”
Sharon Reddell Pierce of Family, Career & Community Leaders of America (FCCLA) said the organization, formerly known as Future Homemakers of America, uses the “Dollars and Sense” course and a train-the-trainer approach that resulted in 600 trained students cascading their knowledge to more than 30,000 students last year.
Jeremy Bolf with the Texas State Securities Board provided a warning about credentials in financial education.
“Bernie Madoff was chairman of the NASDAQ before he started his Ponzi scheme,” he said. “Investment ‘professionals’ are looking for ways to make money in a recession so investment scams are more prevalent. Check anyone you do business with.”
Bolf said consumers can receive a free and confidential full background check on any financial consultant simply by making the request to the Texas State Securities Board. He recommended a TEA-approved curriculum entitled the “Basics of Saving and Investing,” and “It’s Your Financial Life,” a program that he recommends for college students.
Laura Ewing of the Texas Council of Economic Education said the Stock Market Game is one of three student programs used by her organization. Others include Economics Challenge and PFL Challenge. She said the TCEE has launched a pilot project to begin financial literacy instruction in elementary and middle schools.
She said SB 290/HB 3232 passed the House and Senate and was signed by Governor Rick Perry in the 2011 legislative session. The Act requires public schools to offer financial literacy as part of math instruction.
“The terminology is moving from ‘financial literacy’ to ‘financial capability and asset building’,” she said.
Ewing said that USA Today reported in 2010 that student loan debt now exceeds credit card debt.
Military personnel and veterans experience unique financial challenges. A panel of experts offered ideas on how banks can partner with the military families in their communities to promote financial literacy.
“If you are in the military, it’s against the law to not pay your bills,” said Thomas D. Sinkey, a veteran who now works for Extraco Banks, N.A.
Rico Sullivan of Army OneSource said, “If you are serving abroad and you’re worried about your finances, you’re not an effective soldier. If you’re in the military, your boss gets told when you bounce a check, don’t make a payment or miss a child support check.”
Army OneSource provides community support for soldiers and families in areas of behavioral health, financial, legal and faith-based services.
Whatever curriculum the banking institution chooses, volunteers must collaborate effectively with the schools in their service area. A panel of veteran bankers and teachers offered suggestions for best practices for volunteers to relate to teachers, administrators and students.
Jennifer Linton of Texas First Bank in Texas City, uses the Charles T. Doyle Leadership program to provide leadership training to juniors and seniors at two local high schools in Texas City. She uses LEADSOPOLY and Financial Football, two games designed to teach financial literacy.
Who wouldn’t want to learn “The Secret to Becoming a Millionaire”? This is one of the money math lessons used by Tanya Sluder of Happy State Bank in Silverton to teach financial literacy.
“Through this program students learn how saving helps people become wealthy,” she said.
The summit closed with a panel that provided updates on proven financial education programs. Moderator Leilani Lim-Villegas warned that the people who need financial education, “…will never come to you; you have to take financial education to them.”
The Financial Education Curriculum developed by the IBAT Education Foundation and the Texas Bankers Foundation teaches children about credit and how to save. The program uses the FDIC “Money Smart” resources, the “Building Wealth” program from the Federal Reserve Bank of Dallas and the “K-12 Programs” from Junior Achievement.
Randal Mays with Junior Achievement confirmed that the K-12 program correlates with TEA curriculum standards.
Julie Gunter with the Federal Reserve Bank of Dallas said she advises clients to share credit reports before marriage. Not too romantic, but she pointed out that 30,500 households in four counties in the DFW area are 90 days delinquent on their mortgages – information good to know before sharing assets in a community property state.
Erin Scheithe of American Bank in Waco uses the American Bankers Association “Teach Children to Save” and “Get Smart About Credit” programs to provide financial literacy instruction.
Her primary advice is to be prepared – recruit volunteers early and ensure they are comfortable with the lesson plans. Be aware of the costs involved in implementing a program including printing, staff time and giveaway items.
“We provide them with a clear piggy bank so they can see their money adding up,” she said.
One of the exercises she uses sets up a situation in which a student loses his wallet with cash, credit cards, a debit card…and a slip of paper with his password and PIN number written on it – one of the big mistakes often made by young people.
Gina Vincent of the FDIC and Bob Hanvey of Woodforest National Bank praised the “Money Smart” curriculum because of its availability in multiple languages and media formats, its flexibility and ease of use. The program is being updated for use with iPads and iPods, according to Hanvey.
He recommended using a prize incentive, such as a laptop computer, to encourage participation by high school students.
GreenPath, Inc. served as the gold sponsor, and The Genesis Group was the bronze sponsor for this year’s financial literacy summit.
“With the legislative mandate to provide financial literacy instruction in public schools, we believe we are ahead of the game in preparing our member banks with ideas and strategies,” said Lange, president of the IBAT Foundation. “Participation at this year’s summit was at an all-time high, and it was gratifying to have innovative ideas presented.”