Ed | Providing Financial Education and Tools for Equity – Bronx Times

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Students across the country are returning to school, some in person for the first time since the start of the pandemic. While many underserved black and Latin students struggled with systematic educational inequalities before the pandemic, Covid-19 amplified many of these inequalities and brought them to light. A recent McKinsey study showed that due to the pandemic, students of color were about three to five months behind in learning, compared to one to three months for white students. Today more than ever, training young people in technology and business is needed.

World of Money, a non-profit organization founded in 2015, seeks to empower children and young people to improve their financial education and achieve greater economic security and mobility. We connect young people and their parents with financial experts to enable them to learn, earn, save, invest and give responsibly. Since its inception, more than 5,000 young people aged 7-18 and their families have benefited from World of Money’s 120 hours of annual classroom financial education, youth business pitch contests and parent forums. .

But we cannot do it alone. To ensure that all Americans have access to financial education, access to financial services is essential. We can teach responsible use of the financial system in a classroom and online, but if policymakers limit their access in the real world, it will be for naught.

It is essential that Congress approach financial policy from the perspective of those most affected by the pandemic. While efforts such as stimulus payments have helped mitigate the damage, lawmakers are simultaneously reigniting conversations about policies that would limit access to financial products and services.

Specifically, the proposals imposing onerous routing money orders on credit cards would seriously undermine the long-term financial success of black and Latin families. At first glance, this may seem contradictory. However, previous efforts to put limits on debit cards in 2010 resulted in a significant increase in the number of unbanked Americans and damage to low-income communities. These families have been hit particularly hard by the consequences of the debit card cap, particularly the loss of debit rewards, stricter balance requirements, and higher fees – some exiting the traditional banking system as a result. So while lawmakers think they would help consumers, the reality is they would actually be depriving them of the financial tools and services we teach every day.

Additionally, without access to traditional financial services, families will lose access to tools such as fraud protection, while having less access to capital. A recent Federal Reserve report found that as a result of previous debit processing limits, more than 20 million blacks and Latin Americans have been forced to seek alternative financial services. Without access to reasonable mortgages, families are unable to access broader financial growth and basic housing security. Without business loans, a small business cannot grow or invest in new equipment. Access to equity and credit through traditional banking channels is associated with reducing income inequalities, improving mental health, and empowering women.

Even before the pandemic, it was unbearably expensive to live without access to traditional banking and financial products and services. In 2021, the Financial Health Network published a market study which found that unbanked and underbanked populations spent $ 255 billion in fees and interest during 2020. Beyond monetary costs, there are social impacts which are more difficult to measure but which have been shown to have a significant impact on individuals and young people. The Consumer Financial Protection Bureau conducted a review of studies on financial education for young people in 2019 and found, among the effects of education programs for young people, “financial education improves credit scores and decreases credit rates. delinquency ”.

Now more than ever, the pandemic demonstrates that access to the Internet, electronic payments, credit cards and basic financial services are not just a ‘nice to have’ lesson in the classroom, but a key to bridging the financial equity gap. Giving young people the knowledge and confidence to make conscious financial decisions from an early age promotes access to affordable financial services and a reduction in the number of underbanked Americans, expanding opportunities economically and beyond. Combining this financial education with real access to these financial tools is a path to long term success for American youth.

Sabrina Lamb is the Founder and CEO of World of Money, a New York-based non-profit organization.

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