The theme of the New York Fed’s fifth annual “An Economy That Works for All” event was financial inclusion, defined as the availability of opportunities to access and participate in the financial system. The January event brought together researchers, educators, and nonprofit leaders to explore how financial literacy and innovation can strengthen household financial health and broaden economic opportunity.
Setting the Stage: Why Financial Inclusion Matters
In opening remarks, President John C. Williams said the New York Fed’s mission is to make the U.S. economy stronger and the financial system more stable for all segments of society. “An economy that works for all is one in which every person has the ability to achieve their potential,” he said. “Financial inclusion and the financial system both play significant roles in that.”
Advancing Financial Literacy and Economic Education
Keynote speaker Mae Watson Grote, a nonresident fellow at the Urban Institute and founder and former CEO of Change Machine, said there needs to be a new relationship between financial education and innovation, one that moves from information delivery to embedded decision support. Grote highlighted practices that help people increase savings, such as spending roundups and auto-transfers directly into retirement accounts.
Steve Bumbaugh, chief executive officer of the Council for Economic Education, said financial education is now in the curriculum of 35 states and the District of Columbia. His group started FinEd 50, a coalition of financial education organizations that aims to incorporate personal financial education into the curriculum of every state.
Mario Gutierrez, director of development at Working Credit, shared stories that highlighted the importance of being financially literate over one’s lifespan. He emphasized the consequences and challenges youth and young adults face with high-interest credit and discussed services that give individuals practical support, including teaching clients how to pull their credit reports, interpret them, and create an action plan that includes automatic payments and low balances.
The Power of Financial Education and the Promise of Alternative Data
Heather Daly, head of Economic Education at the New York Fed, led a moderated discussion with students from the New York City Department of Education’s HE³AT Program (Healthcare, Energy, Education, Environment, Agriculture, Technology). The students talked about how financial education has empowered them to make better choices by learning about budgeting, saving, and credit.
Financial literacy should be taught to all high school students, the students said, and can be integrated into various courses, including math.
New York Fed researcher Ambika Nair discussed her research on how alternative data, such as rent payment history, can predict creditworthiness better than traditional credit scoring models, which can overlook positive financial habits.
Speakers concluded the event by reinforcing the importance of designing responsive products and services to further financial inclusion. To learn more, see a replay of the conference on the event page.
Chaeri Han is an economic education analyst in the Communications and Outreach Group at the New York Fed.
Edison Reyes is a strategic operations lead in the Communications and Outreach Group at the New York Fed.
The views expressed in this article are those of the contributing authors and do not necessarily reflect the position of the New York Fed or the Federal Reserve System.
