Shut Up About Financial Literacy
Sara Goldrick-Rab

Although I don’t disagree with the sentiment that financial literacy receives a huge amount of focus at the moment and there are many ill considered conclusions drawn from statistics (some key ones highlighted within the post), I don’t agree that financial education as a topic is any less important than ensuring that as many young adults have access to further education as possible. I don’t think that they are mutually exclusive. Humour me and allow me to elaborate.

Financial literacy and the wider concept of societal participation looks at not only the ability to understand, interpret and make a decision about financial matters, but also the ability to have access to financial products to be able to make this choice, as you note with regards to savings for example. The creation of a sound financial system that enables this participation requires the balanced tri-partite aspects of financial literacy, financial inclusion (access) and consumer protection (regulation). Financial literacy and inclusion themselves cross the strands of appropriately informed and strategic career choices and entrepreneurship. These in turn often involve the pursuit of further education to attain increased earnings, access to financial products, investment in appreciating assets and wealth generation. That is not to say it is impossible to accumulate wealth in the absence of further education, but statistically and in the traditional sense of employment, this has proven less likely in recent history.

Therefore, I would suggest that appropriate funding for further education and well planned and executed programmes to improve financial literacy should be pursued and operated symbiotically.

Above all else the purpose of education is for the betterment of individuals and society as a whole. Success is a complicated concept, but it is plausible that many would deem overall success in life to be related to achieving their goals, which are built upon a foundation of existence and hopefully thriving in our prevailing society. Although there are many aspects of the economy fuelled by capitalism which results in inequality of wealth and earnings, we will not be able to make a fundamental and structural change overnight. What we must ensure is that as such a change builds and materialises, people are sufficiently prepared to weather the current climate, whilst being prepared for and bringing about that change also.

Once an individual has achieved a higher rate of earnings as a result of further education for example, how would they know how to most effectively use these earnings to generate and increase wealth? Obviously trial and error will play a part, but why not help minimise the downside risks when we have the opportunity to do so. Hence the need for these two programmes to run in parallel.

Financial literacy and financial education are often used interchangeably as terms, however financial literacy is the balanced combination of financial education AND experience. I believe that in many cases, the limited impact of financial literacy programmes can be attributed to a focus on education alone, without sufficient opportunities to gain experience also. This is a concept long studied by Kolb and others in designing learning to achieve the maximum level of effectiveness, with an appreciation for different learning preferences also.

My passion on this subject also comes from personal experience of persevering to obtain further education without the position of accumulated family wealth for support. I experienced financial difficulties and sought answers/developed strategies to tackle them. Although much can be learned from such experience, much can also be avoided and benefits obtained in respect generating wealth at an earlier juncture by avoiding mistakes. I recently co-founded a social enterprise (Kakeibo) which is focussed on improving financial literacy.

I write this with a warmth in my heart that this debate even exists! That others are so passionate about helping everyone achieve their full potential gives me hope that this big, hairy audacious goals can be surmounted.

I welcome feedback on this, as I think it is vitally important to understand as many views as possible, both generally and in the context of building solutions for the people.

Overall, thank you for sparking this discussion!

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