Americans need to sharpen their financial know-how to help them best use their money, especially during the current economic crisis, Federal Reserve Chairman Ben Bernanke said Monday.
“As the global economy continues to experience extraordinary turbulence ... the need has never been greater for initiatives that help consumers learn to manage their money wisely,” Bernanke said in brief taped remarks kicking off a conference on financial literacy in Chicago sponsored by the Federal Reserve Bank there and Visa Inc.
Improving financial knowledge also can help protect people from scam artists, he said.
On that front, the Fed last month launched an effort to warn consumers about foreclosures scams that are increasingly preying on homeowners.
The modern financial marketplace has led to an explosion of financial products for people to choose from. To make smart decisions, consumers need to shop around and make sure they understand the pros and cons of any financial choice — from taking out a mortgage or car loan to selecting a certificate of deposit or other investments.
The current financial crisis — the worst since the 1930s — has been blamed partly on lax lending standards, and in some cases people taking out mortgages that they didn’t truly understand to buy homes they couldn’t afford. Bernanke didn’t mention that Monday, but he has in past remarks.
Bernanke said experts attending the conference would discuss “best practices” in financial literacy and how they can be applied to a rapidly changing and globally interconnected financial landscape.
It is essential that government and private companies work together. “Only by joining forces will we be successful,” Bernanke said.