← AICPA Personal Financial Planning (PFP)
AICPA Personal Financial Planning (PFP)
From Knowledge to Impact: The CPA's Role in Financial Literacy with Julia Bush
00:17:11
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- [00:00]
A
Gary.
- [00:02]
B
I'm Gary Sinnett and this is your Personal Financial Planning podcast. According to the World Economic Forum, half of all Americans understand basic financial principles. Let me just sit with that for a moment. Only half. Not coincidentally, half of Americans have less than $1,000 in savings and two out of three people live paycheck to paycheck. Now, I'm probably preaching to the choir. You know what financial literacy is like out there. But is there something we can do beyond helping our clients to make a difference? Welcome to the AICPA's Personal Financial Planning Podcast. I'm Kari Sinnott. As the leader of the PFS designation, the Financial Planning credential exclusively available to CPAs, my role is to keep you informed, educated and connected to premier community of thought leaders delivering trusted financial planning. We explore the full range of planning topics and the current events shaping our profession. If you're an advisor, a CPA financial planner, or simply want an inside look at today's topic of empowering Financial literacy, this podcast is for you. Today's guest is Julia Bush. She's a senior tax accountant at Tang Industries and she has a combined BBA in Public Accounting and Ms. In Taxation from Pace University in New York City. Julia brings a thoughtful real world perspective on financial literacy, shaped by her professional journey and dedication to helping others understand the financial world. Julia, welcome.
- [01:45]
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Hi Keri. Thank you for having me.
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B
You bet. Thanks for being on the show. Julia, why are you interested in addressing financial literacy in America?
- [01:55]
A
In my opinion, I think it's one of the most important life skills that we as Americans are just kind of expected to teach ourselves. You know, and as you mentioned in your opener there that only half of Americans possess these essential skills. So clearly that teaching yourself model is not working. Moreover, although financial literacy is for everyone, my focus is mainly for financial literacy for kids. They are overwhelmingly behind in financial literacy and statistics back that up. So about 74% of American teenagers report lacking confidence in making personal financial decisions for themselves. And one in five teenagers lack any basic financial literacy skills at all. So I believe that bringing awareness to this lack of financial literacy education in our country is greatly important, especially bringing this awareness to financial professionals. Like your listeners, many people view financial literacy more as a personal issue. However, though a big piece that I believe is missing from the conversation is that financial literacy education is a great benefit to not only the individual, but to communities and, and even our our entire country. I know I don't have to tell you this, but obviously financial literate people, they, you know, they strengthen communities by starting Businesses investing, building wealth, and, and all of those things lead to overall stronger and healthier economy. So that's why my overall goal at the end of this is to have Americans have a better understanding of their finances so that we can build a better America for everyone.
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It is shocking to think if you lined up for four high school students, three of them would not be financially literate. And we try to go send them out to the world and they'll figure it out on their own. That's basically what we're doing. We're just throwing them into the deep end of the pool. If you're right, it used to be there's a philosophy of hey, you can learn to swim, just jump in. And we often assume financial literacy is about knowledge, but you know, I, I've heard that research shows it is just as much about behavior. So where, where do you see the gap between knowing and doing? And, and how can we help translate the technical expertise that we have, especially for high schoolers, into practical habits so they don't struggle as much as they're dive into adulthood with budgeting and debt or even just savings?
- [04:37]
A
Yeah, so you're definitely right. The gap between the knowing and the doing in personal finance is one of the most consistent findings in behavioral economics. Most people don't fail, if you want to use that word, because they lack information. Obviously, especially with the advent of the Internet and now AI, the information is there, but, but it's usually outside factors that kind of lead to people not succeeding as well as they would like to. So, you know, sometimes their financial situation may kind of overwhelm them, like it's too big to tackle. Also, you know, habits are infamously hard to change. And then also sometimes too, emotions can rule money decisions. So if we as professionals are trying to change habits, we need to understand where our clients are coming from. So for people who don't work in finance, financial decisions can be more of a psychological decision than necessarily a reality based decision. And that's because they may not understand the overall impact that their decisions will have on their life. So, you know, we know a lot of people who maybe love that instant gratification. So they'll keep buying some expensive purchases with maybe not having the money to do so. But another thing is some people will overestimate their abilities and so maybe they might take out a large line of credit and thinking, you know, I'll make enough money in the future to pay that back. But then unfortunately that doesn't happen for them. So as financial professionals, no matter what it is that is causing our clients to behave in certain ways. We have the ability to not only offer our knowledge, but we can also serve as an accountability partner. And that can help reinforce good habits and also help that bridge between the knowing and the doing. So if you're working with clients that are coming to you, really trying to get their financial lives on track, providing them some small actionable tasks can make managing their money less overwhelming and can be a great start for them. And this can also get them in the habit of viewing financial decisions more as a task that needs to be taken care of than necessarily an emotional decision or how I feel like I should be spending my money. And in my experience working with middle schoolers and teenage age high schoolers, I guess I should say this is also a great way to introduce and discuss finances with them. And, and so that we can start getting those healthy habits early before they start making some really, really big decisions for themselves.
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Build those healthy habits early. And now more states, And I think 30 last time I looked, are now requiring personal financial education in high schools, which is an encouraging trend. But what role should we play as financial professionals in shaping the next generation's understanding of money? I mean, how can we partner with schools and nonprofits, employers to expand access to high quality education so by the time they graduate, they are ready to handle the real financial world?
- [07:58]
A
Yes, you are definitely correct. It is up to 30 states currently, which has actually been a great increase. I think it was only six states in 2019. So over the past six years we have been making some big leaps and bounds in this. However, one issue is that although the state may have a requirement, there's usually little to no funding to put that requirement into practice. So what we're seeing in schools is usually the personal finance education is lumped in with another course. And pre existing teachers who may have little to no financial education themselves are the ones that are teaching that course. So I think that's where we as financial professionals can kind of step in in in two big ways. The first way is I think that we need to get people to start viewing financial literacy as an essential skill that needs to be taught in school, like reading or math. And as financial professionals, we have that credibility and the voice to bring awareness to people in our community. So we can engage with community groups, school boards, or even the state governments to try to get the wheels turning on the educational implementation as well as the funding. And that's especially important if you live in one of those 20 states that currently do not offer any sort of financial education requirement. In the meantime, while we're trying to kind of bridge this gap of financial literacy in school, I think it's important that we should also remind parents that their children may not be getting this education. And so it's important for them to be having financial conversations with their kids at home. The second way I can see us as financial professionals kind of stepping in is by working with the school's nonprofits to help provide financial literacy education. So myself, as well as the AICPA, are partnered with Junior Achievement, which is a national nonprofit organization whose focus is on financial literacy education, economics education, as well as career readiness for K through 12 students. They offer a wide variety of courses, educational excursions, career fairs, and other resources. And those things are usually ran by volunteers that are in the finance industry. So you can volunteer if that sounds interesting, as a individual, as a firm, or Even through the AICPA's National Advocacy Pipeline group. And from speaking from experience, this is really rewarding to be able to kind of bestow some of your knowledge to kids and also to know that you're truly a part of setting them up for financial success in the future. And that's not just me saying that Junior Achievement has actually gone back and has spoken with kids that participated in their program who are now adults and have asked them about their experience when they were children. And actually 56% of them report that they are now currently working in a career that is similar to one that a volunteer that they had met when they were a student. So not just getting involved, like, it's not just great for kids, but it is also great, you know, for us and kind of creating that future generation
- [11:39]
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of CPAs, that's inspiring. And to be able to put the knowledge and experience that we have to work in a way that can really just the ripples on the pond, so to speak, of the impact that we can have should be tremendous and should be making such a huge difference for just the whole next generation of people. So I heard a person the other day, he's like, you know what? I'm just going to call up the principal of my high school and let them know I'm available as a sounding board, as a resource for the teacher. If they have a question about a particular concept or need somebody to come in and speak, I'm here as your resource in the community. And it wasn't long after that that of course, they received the call and were able to go in. And it was a fantastic partnership. You know, for planners who are listening right now, Julia. And who want to contribute to financial literacy efforts. But it's hard to know where to begin. What is the most impactful first step a CPA financial planner can take, whether it's through our firm or the community or client base or professional network to really start creating that measurable change point us in the right direction here.
- [13:05]
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Yeah. So as I mentioned earlier, I think that we, as CPAs, we have such a wealth of knowledge that, if shared, can really benefit our community members. So I think that the best first step as a CPA financial planner who wants to get involved is to really join the educational landscape. Right. I know we've kind of discussed throughout that there kind of really is this gap here. So whether that be joining Junior Achievement or another financial literacy group there, there are tons out there. Or even, as you mentioned, you know, going to a school, creating your own small workshop, maybe that if you don't want to deal with kids, that it could be for, you know, adults. Right. In your community at the local library or something of that nature. Right. Because Americans, young and old, we need more access to financial literacy education. So I would suggest talk with your clients, talk with other professionals, talk with your firm, and see where those gaps are in your community and if you can fill them. And as always, you know the AICPA numerous resources available to the public on personal finance topics, on financial literacy topics. So you can always access those and share those with your community.
- [14:21]
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Julia, thank you so much for sharing with our community of listeners. And if you're an advisor listening right now who wants to deliver premier financial planning with confidence, you can do two things. One, just, just as Julia mentioned, go to the AICPA and we will help you in any way we can to move forward this mission of financial literacy, because there's no downside in educating people around the financial information that they need to have. It's nothing but positive. And so we will do all that we can to help you help others. And if you want to deliver premier financial planning, you can always explore everything the AICPA PfP section has to offer. Now for members, that's 269 a year. And you get access to a library of technical guidance, webcast planning tools and experts and their insights, all designed to help you serve clients at the highest level. Level. The more that we can help you be at the top of your game, the more it's good, just for everyone. And if you're a CPA with 3,000 hours of financial planning experience already, consider showing your expertise next year by obtaining the PFS. Credential and you can go to aicpa.org PFS this is our podcast together and if this episode helped you in your practice or encouraged you to get started and reaching out to the community, we'd be grateful if you shared it with your professional community. With almost 600,000 downloads so far, the AICPA PFP podcast is helping to advance the profession one listener at a time. This has been Kari Sinit for the AICPA Personal Financial Planning Division. Thanks for listening and until next time, keep earning trust through clarity, guiding with compassion, and delivering premier planning that elevates our profession.
- [16:30]
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