Deborah Matz
Board Member
National Credit Union Administration
Speech to National Federation of Community Development Credit Unions
In Observance of Financial Literacy Day in New York City

October 18, 2002

Thank you for inviting me to celebrate Financial Literacy Day with you.  I’m so pleased to be here in New York City – my hometown – and to talk about one of my favorite issues – financial literacy.    I want to preface my remarks with a salute to Cliff Rosenthal and his superb staff for their ceaseless efforts to help low-income credit union leaders revitalize low-income and minority communities.  Cliff, your work is truly a model for the nation!  I’m delighted that Mayor Bloomberg has recognized your efforts and named you to the Consumer Council that services the City’s Department of Consumer Affairs.  What an honor for you, Cliff, and what a splendid opportunity for the entire City to benefit from the lessons of the Federation’s success.

I believe that financial literacy is essential to everyone.  Too many Americans can’t balance a checkbook, too many schools don’t include financial education, too many young people don’t know the value of saving, and too many people use credit cards without understanding they will have to pay up in the future.

Financial literacy can make the difference between a prosperous future and a life of poverty.   If you don’t understand money, credit, or budgeting, you cannot be financially successful.  But, if you understand the basics – things like how to pay down your debt and save and how interest charges can increase the amount you owe on credit cards – you are more than half way to financial freedom.  And, financial literacy is important at every age; from six- and seven-year olds learning how to count money to high school students learning how to open a bank account and read their statements – these are the keys to a life of financial security. 

For people who are in debt or who are making weekly trips to a payday lender to make ends meet, financial education can make a big difference.  Financial education includes counseling on how to get out of debt and stay out.  It teaches how to budget, how to make monthly payments, and how to save.  People can learn to save – even just a little at a time – no matter what their income.  And, once they develop the habit of saving – of making a savings deposit first – before making a purchase – after they get their paycheck – it will be a source of pride to watch their savings grow. 

Financial education can teach you how to avoid high interest charges by budgeting and saving for a big purchase, instead of buying it now and paying it off.  When people see how quickly interest charges can stack up when they only make the minimum monthly payment, they will begin to plan and save for large purchases like a car or a big-screen TV. 

Financial literacy education can help to develop good spending and saving habits that lead to building wealth.  Wealth-building is important to young people as they begin their families and their careers.  The spending and saving habits that young people develop in school and in their early work years will enable them to pay for a home and a good education for their children.  And, later, it will help to assure a comfortable retirement. 

Yes, wealth is important, but wealth means assets and you can’t build up assets unless you understand how money works.  I was surprised to learn that the most significant factor in building wealth isn’t a high salary or a big loan – it’s home ownership.  An amazing 86 percent of wealth-poor households are renters, compared to just one-third of total households.  Homeownership has many benefits; it improves communities and creates pride and a feeling of achievement.  I know that most people in New York City are renters, not homeowners.  And, for many people, buying a first home would be impossible without a financial literacy program.  But I have heard about many families that were able to buy their first home, even when their income was very low, even in New York, because they learned how to budget and save – and what a wonderful reward for that hard work – a home of their own!

I’ve been across the nation encouraging financial literacy education – how to balance a checkbook, how to budget, how to get out of debt, how to make monthly payments, how to save at any income level and how to obtain a mortgage loan – and I have heard about dozens of wonderful financial literacy programs.  I know about programs in elementary schools and colleges, programs in English and other languages to meet the needs of all members. 

Many credit unions have excellent financial literacy programs.  Municipal Credit Union has a magazine on its Internet site just for kids that teaches them about money.  Bethex Federal Credit Union has a link on its Web page to the Balance Financial Fitness Program that teaches 10 steps to financial success including how to set goals and how to set up an emergency fund for your family.  United Nations Federal Credit Union sponsors seminars for first-time homebuyers that even explain the pros and cons of cooperatives and condominiums. 

And I’m excited that the Federation will use NEFE’s [National Endowment for Financial Education] curriculum to train financial literacy educators based in community development credit unions who, in turn, will train CDCU members.  There are lots and lots of other programs; whatever you need, from basic facts to advanced details, is available through your credit union.

While the immediate impact of financial literacy education may be hard to measure, I know it’s worthwhile it because it helps people build wealth – and makes them better savers, better-informed buyers, and, ultimately, better members of their communities.  Once again – thank you for allowing me to celebrate Financial Literacy Day and – especially – for your efforts to make every day financial literacy day in New York City.