Before writing this post, I did a brief survey of my colleagues to ask for their thoughts about what financial literacy means and why it is important. Here are some of the responses I got:
“A fair financial marketplace requires that consumers be informed about the products and services they are buying.”
“What are you going to do when you can’t work anymore? Financing your own future means you have to know how to save and how to protect that savings.”
“People are more empowered when they know how to avoid being scammed. Giving people information so they can protect themselves is, to me, very important.”
“When you talk about poorer populations, it’s about helping them understand ways they can help themselves.”
The point is, financial literacy, or financial capability is not a monolithic thing that can be applied, released, or taught in one way to one group. When we talk about the lack of financial knowledge in the United States, we tend to debate:
- Where it should be taught – in schools or at home.
- When it should be taught – in elementary school, high school, college, or on the job.
- How it should be taught – in workshops, online, games, or over months of coaching sessions.
- Who should teach it – K-12 teachers, financial professionals, money coaches, or radio and TV show hosts.
The good news is there are many right answers.
The one thing most people agree on is that it should be taught, and that it requires more than just a transfer of knowledge. For some people, it may require knowledge and building new skills – practice to build comfort and confidence. For others it may mean unlearning bad habits. And for some it could mean a change in attitude – like choosing healthy eating over double cheeseburgers.
The reason there are so many different approaches to financial education is because there are many different audiences, with many different needs, and many different ideas about good solutions.
We can debate the specifics, the methods, and the media, but there is little debate about the need. It’s why we are working every day to create new partnerships, research new ideas, share best practices, and develop new materials and innovative ways to deliver them.
What can you do about it?
- If you have kids, talk about the family budget. Encourage them to save a portion of their allowance to help them build a savings habit and learn to set, and achieve, financial goals. Ask them what they’ve learned in school about money, or talk to their teachers.
- If you participate in clubs or church groups, invite a local consumer group, credit counselor or financial planner to speak. Download free CFPB publications and share them with your group. Volunteer to help others.
- If you own a business or have the ability to make suggestions, consider a program to help employees understand more about managing their money. Start an automatic enrollment retirement plan or provide resources or referrals to help employees plan for their futures.
How can you help promote financial education? Remember, there are no wrong answers.