Financial Literacy is Not a Vaccine, nor is it a Solution. It is an Excuse.

One of my Twitter buddies, Thomas Fox (@thomasjfox) sent a tweet about an article titled “Financial Ignorance is Not Bliss.”

When Americans were questioned by the National Foundation for Credit Counseling, more than 41 percent of adults gave themselves a grade of C, D or F when it came to their understanding of financial literacy.

And less than half the adults in the national survey keep close track of spending, more than a quarter admit they don’t pay bills on time and nearly 30 percent say the terms of their mortgage weren’t quite what they expected: the interest rate was different, they didn’t really understand the role of private mortgage insurance or they weren’t quite clear enough on the payment terms.

”The results of this year’s (financial literacy) survey are startling, but not surprising,” says Susan C. Keating, president and chief executive officer of the foundation. The Silver Spring, Md.-based credit counseling organization released the results of its third annual survey during a congressional briefing this past Tuesday in Washington, D.C.

”We know consumers are struggling financially,” she says, “and that a lack of financial knowledge is contributing to the problems.”

This position by a charity that should know better frustrates the hell out of me. Blaming a lack of financial literacy for our economic ills is like saying that people don’t understand diet, exercise and moderation for obesity.

The argument that financial literacy is somehow a magic pill that people can take is a naive answer to a larger problem. Again, let’s look at weight, since food and money are similar substances; they are both legal and must be used on a regular basis.

I need to lose weight, I’ll admit it. And I’ll even admit that I know exactly what I need to do to lose the weight. But even though I am aware of those facts, why is it that I don’t lose the weight? Again, honestly, it probably comes down to the fact that I am not motivated to change my current life and it provides me pleasure in some way, or I am lazy.

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Not losing weight does not make me stupid and forcing me to take a diet literacy class is not a miracle cure for me to lose weight. Until I am willing to fundamentally change, no class is going to result in a lifelong path change.

When the soapbox is out, credit counselors, legislators and others stand tall on it to proclaim that our financial ills are caused by a lack or failure of financial literacy. That is simply not true. While financial literacy may help some it will still not solve the problem or the fact that it is simply more fun and self-serving to spend money and have access to credit, than it is to be little mini-accountants. And by the way, I’ve had my share of people over the years with debt problems that were accountants.

I’m not sure how much of a class we need to force people to take to make them understand that if you want to have money leftover each month you need to spend less than you earn. The fundamentals of understanding money, credit, and debt don’t have to be complicated.

Take for example a detailed class about understanding credit card terms and conditions. I could bore you for hours on that subject, or you can take the ten second class, read the terms and conditions and if you don’t understand something, ask questions, before you apply for the credit card.

But how in the world is the vaccination of a mandatory financial literacy class going to force people to read fine print in credit card terms and conditions that they already elect not to read now?

The results of the NFCC survey are not a mandate for more financial literacy classes, they are a mandate that what people need is better help to manage their finances.

Maybe it just simply is that people find managing money to be a task they don’t like. Could these be the same people that hire someone to mow their grass, clean their house, or cook special meals? Do we really think that in life, everyone is going to be good and want to do everything? No.

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I really wish that Susan Keating and the rest of the NFCC would stop spouting off about non-sensical solutions and instead they would invest effort to instead create a toolbox of pro-active solutions to help people find professional help to properly care for their finances.

Why is it that I can hire a financial planner to professionally manage my investments but I can’t proactively hire a credit counselor to properly manage my debts for me to avoid problems? Is it a class that people need, or real solutions.

The lack of financial literacy is an excuse, not a solution.


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Steve Rhode is the Get Out of Debt Guy and has been helping good people with bad debt problems since 1994. You can learn more about Steve, here.
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2 thoughts on “Financial Literacy is Not a Vaccine, nor is it a Solution. It is an Excuse.”

  1. gotta have a message my man. specially gotta do that infront of congress.
    the nfcc dont care none bout the peoples. if they did they and the wad o companies not paying taxes the keaster chumps for would be more than one trick ponies. they would not bow and kowtow to bankin whimsies and wood be fightin for the little guy stead a bein glorified debt collecters. yo, gotta gets me bank share at 5% (when im a good ho) a what i can git from my struglin customer. yup – i do be chumpin out my customers. keaster should be backin banksters into the ropes and poundin for a bigger piece-a-da-pie my man. shark collecters gettin 15% o-dat-pie they collect. where you at wit dat keaster? huh? best get back in dat ring and throw a few. none a dem siisy swings neither.

    bankin aint pretty….


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