Why is Financial Education Why is Financial Education Important in Texas? Important in Texas?

TCEE Smarter Texas TCEE Smarter Texas ConferenceConference

Leilani Lim-VillegasLeilani Lim-VillegasFinancial Education CoordinatorFinancial Education Coordinator

Texas Department of BankingTexas Department of BankingDedicated to Excellence in Texas Banking Since 1905Dedicated to Excellence in Texas Banking Since 1905

Financial EducationFinancial EducationMission StatementMission Statement

Bankers – Helping Texans in Bankers – Helping Texans in

making informed decisions about making informed decisions about

budget, credit, asset building budget, credit, asset building

and debt management and debt management

through financial education.through financial education.

Financial Education Coordinator Financial Education Coordinator ResponsibilitiesResponsibilities

Serve as the Department’s Serve as the Department’s point of contact to address point of contact to address financial education issues in financial education issues in Texas. Texas.

Financial education training for Financial education training for bankers.bankers.

Provide bankers with financial Provide bankers with financial education tools and materials to education tools and materials to take back to their communities.take back to their communities.

Financial Education Coordinator EffortsFinancial Education Coordinator Efforts

Bank Visits Bank Visits (since May 2006)(since May 2006)

Financial Education Online Survey Financial Education Online Survey for Banks for Banks (August 2006) (August 2006)

Teach Financial Literacy in Schools Teach Financial Literacy in Schools and Communities and Communities (since January (since January 2007)2007)

Statewide Financial Education Statewide Financial Education Workshops Workshops (October 2015)(October 2015)

Texas Department of BankingTexas Department of Banking

Why Is Financial Education Why Is Financial Education Important?Important?

Financial Education Affects Financial Education Affects EveryoneEveryone

YouthYouth

AdultsAdults

Senior CitizensSenior Citizens

WWhy is Financial Education hy is Financial Education Important? Important?

The goal of financial education is to empower The goal of financial education is to empower consumers to better manage their money, consumers to better manage their money, prepare a budget, initiate savings plans, manage prepare a budget, initiate savings plans, manage debt and make informed decisions about credit debt and make informed decisions about credit and financial products. and financial products.

Why is Financial Education Why is Financial Education Important? (cont’d)Important? (cont’d)

More young adults filed for bankruptcy More young adults filed for bankruptcy than graduated form college (ABA than graduated form college (ABA Education Foundation).Education Foundation).

Basic money management skills are often Basic money management skills are often lacking in adults today and many parents lacking in adults today and many parents feel unprepared to teach their kids about feel unprepared to teach their kids about money.money.

Financial Illiteracy: A Vicious Cycle Financial Illiteracy: A Vicious Cycle

Many teachers are not trained to teach Many teachers are not trained to teach personal finance, and many have never personal finance, and many have never taken a basic economics course.taken a basic economics course.

The uneducated about banking services The uneducated about banking services turn to check cashing services or payday turn to check cashing services or payday lenders to address their financial needs, lenders to address their financial needs, and pay higher fees.and pay higher fees.

Texas Department of BankingTexas Department of Banking

How Does Texas Rank on Financial How Does Texas Rank on Financial Education in the U.S?Education in the U.S?

How Does Texas Rank?How Does Texas Rank?10 states rank in the bottom, including Texas in both 10 states rank in the bottom, including Texas in both “financial literacy” (39“financial literacy” (39thth place overall) and “financial place overall) and “financial behavior (44behavior (44thth) “) “Source: Financial Industry Regulation Source: Financial Industry Regulation Authority (FINRA), April 2015 Authority (FINRA), April 2015

Texans are strongest at budgeting and weakest at Texans are strongest at budgeting and weakest at credit management. credit management. Source: Office of Consumer Source: Office of Consumer Credit Commissioner, June 2013 Credit Commissioner, June 2013

There are more payday lenders than McDonalds and Starbucks combined. Texas has 2,243 single payment title loan locations, one-fourth of the national market. Average monthly payment is $341.59. Source: Pew Source: Pew Charitable Trusts, Auto Title Loans, March 2015Charitable Trusts, Auto Title Loans, March 2015

How Does Texas Rank? (Cont’d)How Does Texas Rank? (Cont’d)Half of those of those auto title loan locations make payday loans as well. Average annual percentage rate in Texas is 306%. Average size title loan is $1,240. Source: Pew Charitable Trusts, Auto Title Loans, March Source: Pew Charitable Trusts, Auto Title Loans, March 20152015

25% of Texas kids live in poverty. Source Center for Source Center for Public Policy Priorities, State of Texas Children 2015, Public Policy Priorities, State of Texas Children 2015, March 2016March 2016

Corporation for Enterprise Development CFED 2015 Corporation for Enterprise Development CFED 2015 Assets & Opportunity Score Card, Texas ranks:Assets & Opportunity Score Card, Texas ranks:

4747thth in subprime credit in subprime credit 4141stst in unbanked households in unbanked households 4444thth in student loan default rate in student loan default rate 5050thth in high school degree attainment in high school degree attainment 4040thth in low-wage jobs in low-wage jobs

Youth Financial Literacy Is A Youth Financial Literacy Is A PriorityPriority

Research has proven time and time again that personal Research has proven time and time again that personal financial management skills and lifelong habits are best financial management skills and lifelong habits are best developed during youth, the earlier the better.developed during youth, the earlier the better.

In 2014, the American Student Financial Assistance In 2014, the American Student Financial Assistance Association reported that 55% Association reported that 55%

of college students acquired their of college students acquired their

first credit card during their initial yearfirst credit card during their initial year

in college, which can lead to the in college, which can lead to the

accumulation of excessive debt at an early age. accumulation of excessive debt at an early age.

Financial Education VideoFinancial Education Video

HoustonvilleHoustonvilleMicroSociety at Sam Houston Elementary

McAllen, Texashttps://www.youtube.com/watch?v=vgJnjju6a0I

2005 Financial Literacy Bills2005 Financial Literacy Bills

Senate Bill 851 (Sen. Shapleigh)Senate Bill 851 (Sen. Shapleigh)

House Bill 492 (Rep. Wooley)House Bill 492 (Rep. Wooley)

Effective September 1, 2005Effective September 1, 2005

Requires the incorporation of financial literacy in Requires the incorporation of financial literacy in Texas schools.Texas schools.

MoneySmartMoneySmart

– Curriculum covers from banking basics to Curriculum covers from banking basics to owning your own home.owning your own home.

– Interactive online training available.Interactive online training available.– Program is translated in several languages.Program is translated in several languages.– Free of chargeFree of charge

www.fdic.govwww.fdic.gov

Building WealthBuilding WealthThe Federal Reserve Bank of Dallas

• Wealth Creation: Learn

the Language

• Budget to Save

• Save and Invest

• Take Control of Debt

• Free of Charge

www.dallasfed.org

IBAT Education FoundationIBAT Education Foundation

How Community Bankers Can Meet the Texas High School Education Legislative Mandate

Teach the Teacher Seminars

www.ibat.org

Texas Bankers AssociationTexas Bankers Association

Since 1977, the American Bankers Association and Since 1977, the American Bankers Association and the Texas Bankers Association have worked together the Texas Bankers Association have worked together through a grassroots network of dedicated banker through a grassroots network of dedicated banker volunteers to promote financial literacy among all age volunteers to promote financial literacy among all age groups. groups.

www.texasbankers.com

Texas Department of BankingTexas Department of Banking

Financial EducationFinancial EducationOnline SurveyOnline Survey

Financial Education Financial Education Online Survey Results (cont’d)Online Survey Results (cont’d)

Is Your Bank Interested in ProvidingFinancial Education Services to People

in Your Commuinty?

Yes86%

No14%

154 Texas Banks Responded to the Survey154 Texas Banks Responded to the Survey

Financial Education Financial Education Online Survey ResultsOnline Survey Results

Does Your Bank ConductFinancial Education Training

for Your Community?

Yes40%

No60%

Financial Education Financial Education Online Survey Results (cont’d)Online Survey Results (cont’d)

Does Your Bank Have a PersonOver Customer Financial Education?

Yes21%

No79%

Financial Education VideosFinancial Education VideosGOODING

Funding the Future Live“Coolest Financial Advisors in America”

http://fundingthefuturelive.org/

http://fundingthefuturelive.us9.list-manage.com/track/click?u=5074dca02cd2e74da09ddb51a&id=17c3a96421&e=429f98df6b

Contact InformationContact Information

Leilani Lim-VillegasLeilani Lim-VillegasFinancial Education CoordinatorFinancial Education Coordinator

leilani.lim-villegas@dob.texas.gov

(512) 475-1337(512) 475-1337

www.dob.texas.govwww.dob.texas.gov