Billions Spent on Marketing Financial Products vs. Small Fraction for Financial Education

The release of a new report from the Consumer Financial Protection Bureau sent shockwaves through the financial literacy community this week, as their study highlighted the substantial disparity between the financial services industry’s spending of $17 billion annually on marketing consumer financial products, as compared to only about $670 million spent each year on financial education.  Put another way, while billions are spent each year marketing credit cards, mortgages, bank accounts and car loans, only a small amount of money is devoted to teaching individuals and families about basic financial management concepts, such as budgeting, saving and long-term financial planning.

The statistics are staggering when thought about from this perspective:  the financial services industry is spending over $53 per person in the U.S. on marketing consumer financial products, whereas only $2 per person is spent on how to make informed financial decisions.  And therein lies the problem; namely that when consumers are barraged with marketing messages from companies aiming to get those individuals to buy financial products, those consumers are not receiving a sufficient amount of unbiased information.  This not only inhibits the growth of financial literacy, but it also sparks even greater levels of confusion and misinformation that potentially results in even higher rates of financial illiteracy.

The CFPB Report is an important reminder of the importance of financial education and of the increasing awareness of problems inherent in financial illiteracy throughout the U.S. and indeed the world.  Today’s fast-growing financial literacy movement is an important crusade to help bring into balance and equalize the forces promoting consumer financial products and financial education.