The “Financial Literacy” Movement Is the Biggest Normalized Scam There Is… Here’s Why.
“Financial Literacy” is all the rage but is it all it’s cracked up to be?
I recently shared a duetted video on TikTok explaining why the “Financial Literacy” movement was a scam. Of course it has a lot of people scratching their heads around why I’d make such a statement. I mean… I am a financial coach right?
The Same Old Song and Dance
When I started teaching on financial literacy I did what many personal finance educators and influencers do, I repeated the same information that was in circulation already. In my mind I believed that it was the lack of access to this information that was the problem for many disenfranchised people. While the sentiment isn’t entirely false, it is incomplete.
After spending over a decade in the industry I’ve realized that the greater issue is how financial education is packaged and pointed to the people who need it most. Without acknowledgment to:
- Where they are currently
- How they got there
- Barriers that prevent them from leaving that place
And while much of the barriers that prevent people from escaping poverty rests in their mindset and education on the topic of money, the barrier to that barrier is anchored in financial trauma.
Financial Trauma
I like to define financial trauma as any instance observed or experienced that has a negative impact on the way you view, interact with, or what you believe about money. Of course this is a broad definition that allows for many instances of trauma to fall under the umbrella term, but that’s exactly the point. Trauma impacts us all differently and thus can come from any source and impact anyone.
Without the acknowledgement of this trauma impacting someone’s relationship with poverty, many of the methods, lessons, and approaches to educating on the topic of financial literacy sound more like a scolding to the listener — tugging at the guilt, fear, and self doubts they may have of ever achieving something like financial independence or at the very least financial stability.
Why Is It a Scam?
Think about who financial literacy is marketed to.
If you said the financially illiterate, you would be partially correct. Financial literacy is marketed to poor people — who most times are also financially illiterate — . You rarely if ever see “financial literacy” programs marketed to people with money. Those people get money managers, private advisors, and other people that tell them what they should do with their money. In my decade long tenure in the banking industry I’ve personally come across many wealthy or affluent clients who had no idea what to do with their money, how credit works, or even how to budget. The assumption that financial illiteracy is relegated only to poor people is arguably intentional as program creators, gate keeper, and funders, pat themselves on the back for giving back to impoverished communities by teaching them the mechanics of money management.
Poor people are some of the best money managers I’ve seen — many simply don’t make enough.
Those who unfortunate enough to grow up experiencing poverty without access to education around how money works and the tools needed to be successful in its management are shamed, ridiculed, and judged for making spending or saving decisions that address their immediate needs and traumas dealing with survival… and that’s not talked about enough.
How to Fix It
The first step is acknowledging people where they are, completely. I often make reference to my coined 3 step program for addressing financial trauma as “the 3 E’s”.
- Exposure
- Education
- Execution
Using this methodology shows the individual regardless of where they start that there is a higher level to be attained. The method would be the same for those experiencing poverty, those in the middle class, or those in the earliest stages of wealth. The subject would be made aware that there a next level and people operating at that level to spark within a desire to see that level realized personally. Once sparked they would embark on an educational journey around how to achieve this next level. This is the point where “financial literacy” can be taught for those without prior exposure. The last step is one that demands taking action. It should be coupled with some form of accountability that says, you know it’s possible, and you know how to do it, now do it. This accountability can be administered via groups/masterminds, coaching, or individually documented via a journal or video diary.
Notice that this methodology doesn’t rely on blame, shame, or guilt but elevation, encouragement, and accountability.
Financial Literacy Is for Everyone
This article is not arguing that financial literacy itself is a pointless exercise that holds no value. It’s arguing that the movement behind how it’s marketed, packaged, and taught is the scam. When we look at the copy for many of the courses, books, and programs that suggest that they are the “secrets of the rich or wealthy” or the “key to generational wealth” we see the monetization not of knowledge, but of a gatekeeping role that says unless you pay me, you cannot access this information.
To be clear, I’m not against people making money for information they have acquired and earned through their own investment of time, energy, or money. I’m simply highlighting that gatekeeping and providing financial education is not the same. As a creator, author, and coach this is a delicate line to walk myself and I imagine is the case for the multitude of others who like me, sell their knowledge, experience, and expertise.
Financial literacy is for all people.
- Rich people
- Poor people
- Young people
- Old people
- The historically disenfranchised
- The historically privileged
but the intent and fuel behind the movement isn’t designed to empower, it’s designed to sustain.
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