Everyone agrees that financial literacy is critically important. That's why April is National Financial Literacy Month. It's not a new concept. Over the past 25 years there has been no lack of opportunity for our citizens -- starting in grade school and even into adulthood -- to access information about using money wisely.
Why then do we have a huge and growing snowball of more than $1.2 trillion of student loans (with rising delinquencies) taken out by a generation that should have learned how to evaluate the cost of debt? Why do we find millennials afraid to invest for the long run in the stock market, but willing to spend $100 a person on a dining experience that will be down the drain in 24 hours? And why do people take out 60-month car loans when they'll want a new car in four years?
Somewhere the lessons of long-term financial success are not being learned. Perhaps that's because the teaching methods aren't reaching the generations that learn far differently from their parents (whose generation has been in charge of financial education curricula). Perhaps there's a better way. That's the optimistic view -- one taken up by a new approach to financial education using a partnership between the award-winning, nonprofit, online Khan Academy and Bank of America.
Online Education Revolution
If you don't know about the Khan Academy, it's worth taking time to visit KhanAcademy.org -- where the homepage boldly states: "You Can Learn Anything. For Free. For Everyone. Forever." These entertaining and educational online courses range from algebra to economics to ancient art and music appreciation. In fact, if you ever promised yourself you'd go back and reread the classics or take the college course you missed, this is the place. They've partnered with everyone from LeBron James to the Brookings Institution and the British Museum to create content that engages.
And now the Khan Academy is partnering with Bank of America to create financial literacy through a shared website, BetterMoneyHabits.com. The short, active, line-drawn cartoon graphics are mesmerizing and educational. The topics range from credit issues to making a budget to figuring out how much home you can afford and guiding you through the mortgage process.
The videos are each approximately 6 minutes and they are compelling. And I say that as someone who has spent my career trying to explain all of these issues! I challenge you to view any one of them. I'm guessing that you will forward the link to someone who really needs this information -- a teenager, adult child or friend who is always complaining about money problems.
The Khan Academy is known for its ability to create learning with pleasure, not pain. And the concept seems to be working in the field of personal finance. There have already been more than 27 million views of the content on BetterMoneyHabits.com, whether the videos or infographics, in the nearly two years since the program started.
The Financial Education Imperative
You might think that financial services firms like Bank of America are supporting these efforts in order to curry favor with regulators. Certainly, that's part of the impetus. But like all businesses, banks are coming to realize that they need an educated workforce, as well as informed customers.
Andrew Plepler, head of corporate social responsibility for Bank of America, says the bank approached Khan to do this project without including any promotional or product-driven connections. Plepler explains the bank's corporate purpose statement is "to make better financial lives for our customers, clients, shareholders and community."
Better Money Habits has partnered with other nonprofits to help spread the content. For example, the Wounded Warrior Project uses the courses to help returning veterans with personal finances. The U.S. Conference of Mayors has incorporated the content in its youth summer employment initiative. And several national community groups are using the program to help low-income families.
Banks have come in for their share of criticism as a result of the mortgage financing disaster of the past decade. Now they deserve some applause for their efforts. BetterMoneyHabits.com is an outstanding one, so I'm glad to give B of A its share of good publicity. And that's The Savage Truth.