Personal Finance

Americans need financial education, report says

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Financial service companies spend billions of dollars a year marketing their products and services—credit cards, checking and savings accounts, car loans, mortgages and home equity products.

By comparison, very little is spent to provide American children with the tools they'll need to deal with the financial decisions they'll face in life.

A new study from the Consumer Financial Protection Bureau (CFPB) documented the huge disparity in this spending. The study found that the industry spends approximately $17 billion annually on consumer marketing. But only about $670 million is spent on financial education each year in this country.

Put another way: While $54 a person is spent on financial marketing to American consumers, only $2 per person is spent to educate them on money matters.

"When consumers receive the vast majority of their financial information from companies that are trying to promote an image or sell products, consumers have very little unbiased information," Richard Cordray, director of the CFPB, said in a statement.

Cordray said the report, "Navigating the Market," "further reinforces the dire need for more and better financial education in this country."

There's nothing wrong with truthful advertising. But to some, the huge disparity in expenditures is troubling.

(Read more: Five things teens don't know about money)

"Our financial lives are becoming increasingly complicated and it's hard to make good decisions when you don't even understand the basics," said Gerri Detweiler, director of consumer education at "Marketing is designed to sell products and sometimes those may not be the products you need or should be spending your money on."

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When a young person makes mistakes, such as not contributing to a company 401(k) plan, maxing out credit cards or making late bill payments, the repercussions can be serious and long lasting.

"It's absolutely crucial that we teach this information," Detweiler told me. "I don't think there's anything you can say that is more important than how to manage your financial future."

A survey of consumers 18 and up done earlier this year, found that nearly 63 percent of those polled believe America's children learn little to nothing about personal finance. More than half (56 percent) of the young adults surveyed said they know very little about how to manage their finances.

(Read more: Open to Debate: Are Americans financial dummies?)

"This is completely unacceptable," said Adam Levin, chairman and co-founder of "We should do better. We must do better."

Only 14 states require schools to offer courses in personal finance, according to the latest study by the Council for Economic Education. Only 22 require a high school course in economics. And the number of states that require students to take tests on financial life skills dropped from nine in 2009 to just five in 2011.

"Teens and young adults who grow up in states that require financial education courses are better at managing their money" Levin said. "They are significantly more likely to put money into savings and pay their credit card balances in full every month, and less likely to max out their credit cards, make late credit card payments or become compulsive shoppers."

Laura Levine is the executive director of the Jump$tart Foundation, a nonprofit that promotes financial literacy for children. She would like to see personal financial education start in elementary school and applauds the CFPB for focusing attention on the need for more education.

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"We are not spending nearly enough in dollars, time or attention to this issue," she said. "Not only do we need to reach more students, but we need to reach them more often. We must start earlier and reinforce it over time."

—By CNBC contributor Herb Weisbaum. Follow him on Facebook and Twitter @TheConsumerman or visit The ConsumerMan website.