We Need an Old School Approach to Financial Education
I served on the financial literacy task force in 2015, collaborating with legislators, schoolteachers, non-profit heads, and business specialists on how to define the voids in financial literacy.
They divided us into three parts; k-12, College & University, and Adult. I was fortunate enough to co-chair the adult subcommittee.
Each subcommittee singled out the impact of voids in financial education from the context of their cohort.
The culmination of the task force ended in an opinion summarizing the state of financial literacy in the commonwealth of MA.
From Kindergarten to Retirement, specific proposals on how to lessen holes in each segment.
My awareness of how the sequence of a shortfall of economic knowledge in childhood, followed by accelerated financial decision-making in teenage years and the decrease of earnings to high-cost debt, influences millions of families.
However, the most significant “ah-ha” moment came as we presented the findings of our work. One of my peers asked a provocative question that has stuck with me since then.
With finances and financial decisions, she simply asked, “What happened to experiences?” She referenced the experiences of trips to the bank to cash a check or to spread the bills out on the kitchen table to write checks and pay.
What happened to the experiences?
Learning from our experiences is more common than learning from a textbook; it’s how we contextualize street smarts from book smarts.
Experiences occur when we learn and develop skills through direct practice.
Experiential learning is how we develop financial habits and behaviors for financial matters and money concepts.
Our experiences, observations, and conversations form lifelong habits and behaviors. However, we have fewer financial experiences than we had in the past. Technology has enhanced efficiency at the expense of human experiences.
We pay bills, transfer money, buy stocks, and send money through cell phones or laptops. As a parent, you can handle most household finances using technology, and your children wouldn’t be able to distinguish those activities from scrolling through social media.
In the past, if a parent went to the bank to cash or deposit a check with their child, there was an opportunity for conversation. Why are we going to the bank? What does a bank do? Why do you give them a slip of paper and they give you money? A simple trip to the bank can yield endless questions about the real-world applications of money.
The lack of financial education in our society is a decades-long program. However, we fail to acknowledge how technology has diluted the most prevalent method of financial education, experiential learning.
Experiential Learning
Several benefits of experiential learning make it the perfect supplement to financial education or as a primary form of learning where there is a lack of financial education. The benefits include;
· Engagement of learners in hands-on experiences and reflection
· The connection of theories and knowledge to real-world situations
· An examination of actions, thought processes, and emotional responses
· The ability to present a core philosophy and allow the learner to comprehend it through their lived experience.
So, how do you incorporate experiential learning for financial education in your household?
Talk about finances.
It’s crucial to ensure you are proactive with financial education conversations during critical moments. 9.1% inflation is one of those critical moments. What happens when prices rise? Do you continue to buy or switch to a different alternative? Why would you choose that option over another? Remember, we build habits and behaviors based on responses to an event, not the event itself.
Go “Old School”
It may not be cool to break out a checkbook or to pay a bill by check, but we’re talking about learning. Teach the basics of writing a check and be disciplined enough to endure the 5–7 days it takes for the funds to clear and appreciate your documentation. Remember that someone will probably never teach it if you do not teach it in your household.
Understand why you use money
When you don’t carry cash or use it often, it’s hard to contextualize; using credit or debit cards removes restraints and emotional ties to money when digital versus physical. One way to ensure you maintain restraints or focus on financial goals is to be specific about your goals and how to achieve them. Maintaining goals allows you to think about your financial decisions to goals and can influence your behavior.
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George Blount coaches indivuduals on wealth building strategies, money tips, overcoming money blocks, and passive income strategies for the new generation of wealth builders. Sign up for my newsletter and take the Money Mask Quiz at https://moneymask.ck.page/gmblount .
