The REAL Real Lesson Of Financial Literacy Month

The CU Water Cooler called attention to a GlobeAdvisor article titled The Real Lessons of Financial Literacy Month. The article lists “12 points that  no one has raised since Financial Literacy Month began Nov. 1,” and includes some very worthy items like “banks are part of the problem” and “relying on schools to teach financial literacy is passing the buck.”

My take: While the list is good, the article still misses the REAL lesson that no one has raised since FLM began:

Financial literacy is not a worthwhile goal or objective.

The problem that many people have regarding the management of their financial lives is rooted in behavior, not knowledge. Knowing how to effectively manage your financial life doesn’t mean that you will effectively manage your financial life. It’s like driving a car — knowing how a car operates doesn’t make someone a good driver.

You might think that I’m mincing words here, and believe that while behavior might be the important goal, that literacy or knowledge is the path to achieving that objective.

Hogwash. I’ve never taken a financial literacy course in my life. I’ve never accessed a single web site page on any financial institution’s web site that dealt with financial literacy.

In other words, I would have a hard time proving that I’m financially literate. But I have no debt, my family spends within its means, and my financial life exhibits none of the problems or issues that are characteristic of those who are supposedly financially illiterate.

Literacy is simply not the problem we — as a society — need to address. It’s personal accountability and responsibility for one’s own financial live.

The “as a society” part of that sentence is important. Blaming banks, credit card issuers, or mortgage lenders for the problems that people have with their financial lives is wrong. (It seems to be a popular sport these days to consider banks that foreclose on defaulted mortgage holders to be the “cause” of homelessness). 

Should makers of Cracker Jacks prohibit the sale of their product to people who are overweight? No. It’s the responsibility of the individual to eat right, and pass on eating junk, or eating it in moderation. Cracker Jacks could educate consumers about how sugar is bad for you, or how taking in more calories than you expend causes weight gain, etc. — but if people aren’t disciplined about what and how they eat, the problem won’t go away. 

So, if you work at a financial institution that is promoting Financial Literacy Month, good for you. But you’re probably having absolutely no effect on the real problem. Stop trying to educate people about financial literacy. Give them tools to change their behavior. Or get tough, and tell them what to do.

And for the holier-than-thou, righteous types out there: Stop blaming financial institutions for the bad decisions that individuals make. 

p.s. No boxes of Cracker Jacks were harmed, or consumed, in the writing of this blog post.

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