The Problem With Financial Literacy—And A Proposed Solution

The problem with financial literacy is that it gets off on the wrong foot. The very moniker is condescending, implying that those it serves are financially illiterate, that they have no idea whatsoever how to use money.

Thus, in addition to condescension, we must add inaccuracy to the list of financial literacy’s foibles, because having a lot of money certainly is no prerequisite – or guarantee, as it so happens – for understanding how it works. Even the poorest of the poor are embracing entrepreneurship through the advent of micro-finance to raise their standard of living from critical to stable. Even the 10-year-old kid buying a candy bar at the corner store is successfully completing a transaction. And even the 50-something who spends 110% of his annual income with the aid of a home equity line of credit may be demonstrating a more dangerous lack of money mastery than those generally labeled financially illiterate.

And besides, who among us is quick to embrace a solution that requires the admission of complete ignorance?

A person leads a finger on the lines in the book, but instead of letters only question marks on the page in the textbook
Financial IlliteracyGETTY

A Misleading Moniker: Financial Literacy Month

Originally in ForbesApril is National Financial Literacy Month, and while I would never argue against financial literacy, I have a fundamental problem with the moniker. Who, after all, would willingly step forward and proudly announce themselves illiterate—at anything?

Unfortunately, I believe that’s what fully embracing the financial literacy movement requires. It positions financial educators as the Dickenses of currency and those who struggle with money as the collective Oliver Twist. Yes, it’s unfortunately true that too many Americans lack optimal—and perhaps even sufficient—personal financial education. But a sweeping declaration that labels the majority of the country financially illiterate does little to advance the cause. And it may even slow the progress we seek.