A a personal finance blogger I had to admit I got fairly excited about a concept of a task force to look into improving financial literacy that is taking submissions from the public. In general I think there are lots of great bloggers out there that try to help others as they learn about paying off debt, retirement savings and living in your means. Yet a national push on helping people learn could be a good thing, but I suspect they might not hear a too many different points of view. Since I suspect a lot of submissions will be from banks, brokerages and insurance companies. Hence I’m putting together a submission of my own.
In mine I’m going to suggest a few ideas on educating people in general, but I do want to point out a few major themes such as:
- Money is an emotional thing. Lots of plans to educate people about money fail for one simple reason: money is an emotional thing. If it were not an emotional thing educating people would be easy since most basic personal finance concepts are fairly damn easy to learn: live below your means, compound interest, or don’t try to time the market.
- Avoid too many ‘rules of thumb’. Since money is emotional we tend to do all sorts of things that make no sense on a math basis, but do make sense on a personal basis. So a ‘rule of thumb’ tends to become useless very quickly since decisions always have an emotional part to them.
- You can’t force education. I haven’t been part of the education system for long, but I can tell you a common problem is how to engage kids to learn. That is with them being required to be at school, now image the problem across all ages groups and not being in a school setting. You get the idea how difficult a task this will be to get people interested in their money. You will need some plans to engage people.
- Don’t go to extremes. Often many personal finance books are geared towards those with higher incomes since they do tend to be the most interested in personal finance. What people need to see is example for lower incomes as well. Saving 10% of your income sounds easy, but try doing it with a $40,000 family income with two kids living in Toronto. Aim examples at many different levels of income for the best results.
That’s just a few themes that I’m planning on discussing. What would you put in to a submission?