The Problem(s) with Financial ‘Literacy’

Visual Description: Young high school students sitting at desks with bored expressions

Well, considering that the time gap between that high school personal finance class (if there is one, and I’m not sensing any movement to require such things on college campuses) and employment is frequently longer than 20 months, it’s little wonder that the needle hasn’t moved much, certainly not as much as one who is trying to engage with these individuals in financial planning might wish. Rather, as the researchers note, “There must be some immediate opportunity to enact and put to use knowledge or it will decay. Moreover, without a ready expected use in the near future, motivation to learn and to elaborate may suffer.” 

Said another way, you have to “use it or lose it.”

The paper offers some possible remedies. Specifically, they suggest that future education might be more productively focused on teaching “soft skills like propensity to plan, confidence to be proactive, and willingness to take investment risks more than content knowledge about compound interest, bonds, etc.” They note that in their meta-analysis, “measured knowledge of financial facts had a weak relation to financial behavior….” Which, I have to say, seems to validate my sense of the inadequacy of current financial “literacy” measures. 



This article highlights the disparities within high school curriculum relating to their financial literacy courses. In my high school these efforts manifested in a required class called “personal finance”. While this class brought attention to the existence of some tax forms and whatnot, I mostly remember it being a ‘study hall’ class where most days everyone goofed around. This makes me feel as if the curriculum for these types of classes are dubbed ‘easy A’s’ to try and not overwork the student. In my experience, teachers and professors who take a relaxed approach in hope to motivate their students often have low retention rates. This article also makes me interested in researching the way high school students retain information. I think American high school students are very good at swallowing information, getting an A, and then never thinking about that information ever again. What also interests me in this article is the promotion of learning soft skills like ” propensity to plan, confidence to be proactive, and willingness to take investment risks more than content knowledge about compound interest, bonds, etc.” Teaching hard facts to high school students is not a viable learning path towards financial literacy. This article suggests to not use that path and instead help teach healthy habits to make the act of seeking out financial information not so daunting. They highlight in the article that additional mathematics education does have a positive effect on financial literacy and the ability to quickly learn and apply that information. Students need a way to apply and use the information given to them as well as receiving quality financial education in the first place. A more quality education would include those soft skills paired with the existing basic information; they need a way to implement and practice with the skills in a realistic way.