My Way or the Highway: Restructuring Financial Literacy

It's financial literacy month, and it's time to face the music. The 2014 S&P Global Financial Literacy Survey found that just 57 percent of American adults demonstrate financial literacy. The "my way or the highway" approach to teaching financial literacy simply doesn't cut it. The traditional method of teaching financial concepts as a one-size-fits-all solution fails to address the diverse needs and backgrounds of individuals, especially those facing socioeconomic hurdles. This is where financial coaching steps in, offering a personalized and empathetic approach to bridging the gap.

The Problem with the "Old School" Approach

The traditional approach to financial literacy often assumes that everyone can and should follow the same path to financial success. Concepts are taught in a standardized manner, without considering the unique circumstances or challenges that individuals may face. In fact, the entire system of how we teach in America is still based largely on the foundation laid by Horace Mann in 1837. Mann believed that young people joining the industrial world would need to be able to compete to succeed. For his system of education to function, he encouraged lumping students into groups and prioritizing punctuality and ritual. In reality, this approach to educating can be alienating and ineffective, particularly for those who do not fit into the mold. For example, hosting a seminar on how to build credit in person at 9:00 am on a Tuesday immediately eliminates anyone who works, anyone who has children they need to drop off to school, and anyone currently in school.

Empowering Through Personalization

In a modern and inclusive financial coaching approach, open-ended questions and the Johari Window model are utilized to understand each student or member as an individual. The Johari Window model, developed by psychologists Joseph Luft and Harrington Ingham, aids in improving self-awareness and mutual understanding between individuals. Open-ended questions encourage participants to provide detailed responses, gaining deeper insights into their financial behaviors, beliefs, and goals. How are we to educate before understanding where a member is at?

This approach emphasizes tailoring coaching to effectively address clients' needs and facilitate meaningful financial behavior change. It focuses on building trust and developing personalized strategies that resonate with clients' unique circumstances. Recognizing that everyone's financial journey is different, especially those facing socioeconomic hurdles, this approach aims to gain insights into each participants individual experience and bridge the gap to financial literacy, and create lasting financial capability.

According to the S&P Global Financial Literacy Survey, only 47 percent of adults living in low-income households are financially literate. Additionally, 29 percent of adults surveyed reported not feeling comfortable going to a bank or credit union branch to ask questions about a financial product or service. One of the key strengths of this modern financial literacy approach is its ability to personalize education and guidance, creating a safe space for individuals to ask questions and receive relatable, actionable advice.

The Road Ahead

As we look to the future of financial literacy, it's clear that a one-size-fits-all approach is no longer sufficient. To truly empower individuals and bridge socioeconomic gaps, we must embrace diversity in financial education. This means recognizing and celebrating the unique experiences and backgrounds of each individual and providing them with the personalized support they need to succeed.

The "my way or the highway" approach to financial literacy is outdated and ineffective. By embracing financial coaching and personalized education, we can create a more inclusive and empowering financial system that works for everyone, regardless of their background or circumstances.

Sources:

Global Financial Literacy Excellence Center. (n.d.). S&P Global FinLit Survey. Retrieved from https://gflec.org/initiatives/sp-global-finlit-survey/