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Teaching financial literacy

Personal finance expert Beth Kobliner

TEXT OF INTERVIEW

Tess Vigeland: Financial system is getting a makeover as part of the new financial reform legislation. This includes the new Office of Financial Literacy in the Consumer Financial Protection Bureau. Sure, you're thinking, "Not another group to study on how bad the economy is." But can these studies actually help us in the long run? What are the financial basics we should all know?

Beth Kobliner, author of "Get a Financial Life" is here to answer those questions. Welcome back to the show, Beth.

Beth Kobliner: Great to be here Tess.

Vigeland: You know, it's been said that in Washington, commissioning a study is basically the equivalent of letting ideas go to die. Now, part of the legislation calls for a year-long study about financial literacy. Why do we need another study on this? Don't we know at this point that there's a lot of work to be done here.

Kobliner: Right. Well, the legislation does call specifically for two studies within this section on financial literacy and financial education. But they're very specific. One is a report that basically, just manual report that looks at what progress this Office of Financial Education is making. You know, how well are they improving the financial literacy of Americans, and I think that's a good thing. You know, looking at real metrics and real progress.

But the second study is investigating the feasibility of certifying expertise in terms of financial literacy. In other words, the House initially proposed that we offer, basically, financial counseling certification for community groups, and there's some sort of specific certification program. And then the SEnate pulled back and said, "Wait a second. This is just a small office, can we really do that?" And so that's what the controller of the (currency) is going to do. So I don't see this as study after study, sort of the academic halo of "where do we keep going?" and studying and studying. I see this as two very concrete studies that are much needed to figure out how do we attack the issue of financial literacy.

Vigeland: Well, if you were advising them, how would you say to get started on this kind of thing? I suppose, first of all, it's good that we're addressing the literacy issue, but how do you start tackling that when so many other organizations have already tried?

Kobliner: Working with the grassroots group that are out there already. You know, going back to President Obama's grassroots is the right decision, in terms, of getting the money out there to organizations that already do financial literacy. Getting it to the groups that are out there educating people. You know, at the point at which somebody is about to get a mortgage, making sure they understand what are they getting; at the point at which somebody is about to get a credit card, making sure they're getting unbiased information and they know what the interest rate is on their credit card.

The government earlier on this year did do a financial literacy study on what percentage of people understand what the interest rate is on their highest credit card. And astoundingly, one in three people don't know that interest rate.

Vigeland: What do you think would be the most effective way to get the basics of personal finance out to the public?

Kobliner: I think that often, you know, we're so trapped in this media-Internet world, and I think there's something to be said for human contact. I think when somebody finally gets that credit card, if it's a person they can interact with, or I mean, this new consumer agency is going to have a hotline for people to call with complaints, but also with questions. So if there's some sort of human contact that you can get that isn't a broker selling a stock, or isn't a mortgage broker pushing you toward a mortgage, I think that really makes a huge difference for people.

Vigeland: Beth Kobliner is the author of "Get a Financial Life." She is a long-time advocate of financial literacy, and we've been talking about the new financial reform bill. Also, a very good friend of show. Beth, always nice to have you on. Thanks so much.

Kobliner: Great to be here.

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