The Best Way to Teach Financial Literacy
Best Way to Teach Financial Literacy
What is the best way to teach financial literacy? Is it through blogs, books, or courses? Is it best taught at home or in schools? Should it be by trial and error? While we may not all agree about the best way to teach financial literacy, we can all likely agree on one thing. There is a serious lack of financial literacy in this country.
The Status of Financial Literacy
Much has been made about the lack of financial literacy in this country, and for good reason. In fact, a large portion of the American public, and the world, can be categorized as financially illiterate. The Standard & Poor’s Global Financial Literacy Survey found that only 57% of U.S. adults are financially literate and roughly a third of adults around the world are financially literate.
Where Do People Learn Personal Finance Skills?
There are three main sources where most learn their personal finance “skills,” but unfortunately only one can be counted on as a semi-reliable source. 1. School 2. Media 3. Home
1. School
Of these three, school is the best venue for teaching personal finance skills. Personal finance teachers are skilled in basic financial literacy and can pass this knowledge onto students before they can make too many financial mistakes. Kids begin learning about personal finance long before entering school, and their education varies widely depending on who they live with and what they’re exposed to.
2. Media
Like it or not, media plays a huge role in shaping our attitudes and beliefs, and personal finance isn’t excluded. Studies have shown that exposure to media, especially media geared toward materialism and consumerism (aka, ads), tends to shape us to be more materialistic.
3. Home
This phenomenon, known as Social Learning Theory, posits that children observe the behavior and habits of those closest to them, encode that behavior, and then imitate it. That behavior can then either be reinforced or not depending on the reactions of those around the child.
4. Leading by Example
If you have kids it’s very important to demonstrate good money habits, not just to talk about them. Kids will do as you do, not necessarily as you say. But in general, modeling good money habits for those around you will help them increase their financial literacy as well.
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