Unpopular Opinion: Financial Literacy Will Not Solve All Of Your Financial Problems
It might actually make them worse...
As a financial educator one of the things I’ve come to realize that financial literacy isn’t enough. It’s become this cliche buzzphrase across all forms of media that speaks to a wide variety of strategies, disciplines, and tools tied into social justice and diversity and inclusion initiatives.
The problem is just that, however.
Using terms like:
Financial education
Financial literacy
Financial empowerment &
Financial wellness
interchangeably is not only inaccurate, but dangerous because knowledge and the application of that knowledge are two very different things. How we feel about the application or misapplication of what we think we should be doing (financially) has a negative impact on our confidence and self worth. Those feelings of negative self worth ultimately have an impact on our overall wellness through decisions or choices that are not conducive to our financial goals.
…and to be honest
It’s also insulting to minority underprivileged Black communities to assume that just because we navigate poverty systemically that we don’t know the difference between a debit card and a credit card. While this may be true in some instances, the assumption that White, middle-class, suburban families have the keys to wealth building secrets is also false.
Sometimes we learn by reading
Sometimes we learn by observing
Sometimes we learn by doing
And sometimes our environments are not conducive to learning anything at all
So what I’m saying is, if I could wave a magic wand and have the entire population of people become financially literate there would still be issues with the management and mismanagement of money.
Just like you know you shouldn’t eat a whole pizza before bed, or drink and drive, we make decisions financially that we shouldn’t…even though we know better.
Despite knowing better, there are various factors that negatively influence those outcomes making it much easier to overspend, delay investing, etc.
This is not an argument discounting the importance of financial literacy, it’s simply to say that it’s not the solve.
So what is?
Having a better relationship with your money.
That means not only understanding how the tools and strategies work but also asking yourself how does this process of managing money feel to me? Do I make enough to make me happy? How do I even define happy in a world that tells me I need more, more, more? Identifying and unlocking the traumas you have tied relating to money.
Did you know that your money beliefs and habits are locked in around the age of 7?
That’s not to say that they can’t change but think about life at 7 and what familial, cultural, environmental, etc factors may have influenced you.
No, financial literacy will not solve all of your problems and if you aren’t careful, it will actually make them worse. Thinking that you need to behave a certain way, achieve certain goals, and comparing yourself to others financially will most certainly frustrate and discourage you from building a positive relationship with money based on your individual needs.
Fortunately, there are educators out there who can call out this BS narrative that the life of your dreams exists on the other side of “literacy” alone.
As a Certified Financial Education Instructor (CFEI®) and Accredited Financial Counselor (AFC®) I have the skills you need to improve your knowledge, relationship, and behaviors around money. Feel free to reach out with inquiries regarding 1x1 or group bundle sessions or have me speak at your organization. Rahkim@rahkimsabree.com
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Thank you always,
Rahkim