Money Smart A financial education program Luke W. Reynolds Chief, Outreach & Program Development Federal Deposit Insurance Corporation

Why is the FDIC involved in financial education? Reasons include: Unbanked To help fight predatory lending Complicated Financial Landscape –Market innovations

Money Smart Money Smart is FDICs financial education curriculum –Over 495,000 copies have been distributed –Over 1 million consumers have been trained –Over 1,400 organizations are members of the Money Smart Alliance Money Smart has received recognition

Two Versions for Adults: Instructor-Led & Self-Paced Self-Paced Instructor-Led

Money Smart modules Module 2: Borrowing Basics Module 3: Check it Out Module 4: Money Matters Module 5: Pay Yourself First Module 6: Keep it Safe Module 1: Bank on It Module 10: Your Own Home Module 9: Loan to Own Module 8: Charge it Right Module 7: To Your Credit

Instructor-Led Curriculum Each module is structured identically Comprehensive guide for instructors Take-home booklet for participants Overheads Duration of each module: 1-2 hours Available in: English, Spanish, Chinese, Korean, Vietnamese, & Russian Version for blind or visually impaired Revised as of August of 2006

Computer-Based Instruction (CBI) (Self-Paced) Curriculum Online or CD-ROM minutes per module Available in English and Spanish Revised in 2007

Money Smart for Young Adults Helping Young Adults Learn The Basics of Handling their Money and Finances

Survey of Money Smart Participants A Longitudinal Evaluation of the Intermediate-term Impact of the Money Smart Financial Education Curriculum upon Consumers Behavior and Confidence (2007) Goal: measure results of Money Smart training in the months following the course Unique because of focus on broad audience

Methodology Three phases –Before taking the course –Immediately after the course –6-12 months following the course

Who participated

Observations-starting course Illustration 4: Breakdown of respondents reasons for not having a checking account at the beginning of the course Reason for not having a checking accountYesNoTotal No need for account38 (28%)96 (72%)134 (100%) Request to open bank account was rejected14 (10%)120 (90%)134 (100%) Minimum balance or fees are too high13 (10%)121 (90%)134 (100%) Use a check-cashing store13 (10%)121 (90%)134 (100%) Don t know how to use one 10 (7%)124 (93%)134 (100%) Don t trust financial institutions 6 (4%)128 (96%)134 (100%) Don t have proper identification 3 (2%)131 (98%)134 (100%) No financial institutions in neighborhood/area1 (1%)133 (99%)134 (100%) Some other reason59 (44%)75 (56%)134 (100%)

Money Smart Survey Results Findings include: Immediately after completing the course: –69 percent of respondents reported an increase in their level of savings, –53 percent reported their debt decreased, and –58 percent stated they were more likely to comparison shop.

Money Smart Survey Results (cont.) 6-12 months following the course: –13 percent of participants who already had a checking account opened a different type of account at the same bank & 22 percent opened a checking account elsewhere, showing the ability to comparison shop –43 percent of those without a checking account opened a checking account –37 percent of those without a savings account opened a savings account –28 percent of those with checking accounts and 22 percent of those with savings accounts began using direct deposit for the first time

Money Smart Survey Results (cont.) –61 percent of those not using a spending plan/budget at the end of the course were using one –95 percent of those who used a spending plan/budget at the end of the course still used it –12 percentage point increase in those who always pay bills on time compared to the beginning of the course

Opinion questions Illustration 32: Responses to I am in control of my money. PhaseAgreeDisagreeNot sureTotal Pre-training survey428 (69%)105 (17%)91 (15%)624 (100%) Post-training survey516 (82%)57 (9%)54 (9%)627 (100%) Follow-up survey574 (91%)47 (7%)8 (1%)629 (100%) Illustration 34: Responses to I understand the way I spend my money enough to make a budget. PhaseAgreeDisagreeNot sureTotal Pre-training survey487 (78%)55 (9%)81 (13%)623 (100%) Post-training survey580 (92%)19 (3%)29 (5%)628 (100%) Follow-up survey584 (93%)35 (6%)11 (2%)630 (100%) Illustration 35: Responses to I am comfortable doing business with a bank or credit union. PhaseAgreeDisagreeNot sureTotal Pre-training survey528 (84%)25 (4%)72 (12%)625 (100%) Post-training survey556 (89%)19 (3%)51 (5%)626 (100%) Follow-up survey572 (91%)46 (7%)12 (2%)630 (100%)

Student Satisfaction Approximately 95 percent of respondents reported that they were satisfied with their Money Smart course

Financial education: the foundation Trust between consumer and financial institution Developing a budget and saving money Buying a home and/or starting a small business Establishing Relationship with a Bank / Credit Union Opening a Savings and/or Checking Account Creation of long-term assets Building wealth Financial Education Can Be the Building Block to...

Questions? Luke Reynolds (202) Thank you