There are various adages that warn against the dangers of discussing politics or religion. Either topic can shut down even the most cordial of conversations.
Money is a close third on the list of taboo subjects. People take finances seriously, personally and with an air of privacy; few want unsolicited input.
Conventional wisdom associated with financial literacy assumes a shared value placed on security, earning, saving, spending, sharing resources. It emphasizes focused financial management; saving for emergencies as well as retirement and other goals; careful budgeting and investing; identity security; and shrewd borrowing decisions.
Application of such tools, tips and skill sets might seem logical, but financial literacy is about more than mathematical aptitude and access to information. Instead, we must consider that factors like cultural values and practices, familial dynamics, generational poverty and other social drivers play a huge role. Thus, the road to acquiring and practicing financial literacy is not level.
Stereotypes don’t help, either, and they’re woefully inaccurate.
One persistent myth is that various groups are “bad” with money. In reality, statistics indicate an aversion to saving, living within your means and other positive behaviors cut through most segments of society.
Only half of U.S. adults expect to have enough money saved to retire comfortably — or at all. That same percentage doesn’t understand the connection between a low credit score and financial security, according to a LendingPoint study.
As a result, financial education requires a more individual approach. This includes asking questions and exploring how your upbringing and background influence your beliefs and attitudes, notes author Adam Carroll.
Carroll trains financial coaches, myself included. He honed his approach by normalizing the concept and topic of money, discussing it personally and in tangible terms.
He encourages asking questions: Do you consider yourself a saver or a spender? What is your attitude about money? What is your earliest money memory? Why does that stick out in your mind? What did that teach you about money? Is there a person who shaped your attitude about money, in either a negative or positive way?
Such questions foster open conversations about personal approaches to managing money. Financial literacy becomes an ongoing conversation, emphasizing what forms, challenges and changes behaviors.
Ultimately, Carroll’s approach eschews stereotypes and negative mindsets — like “I’ve always been bad with money” — empowering individuals to take financial control.
“When I was growing up, I had no idea that my parents struggled financially,” he writes in “Winning the Money Game: A Rule Book to Achieving Financial Success for Young People.”
In Carroll’s high school, his peers viewed him as “wealthy.” He later learned this perception was inaccurate.
“ (My dad) has since confided in me that they occasionally put necessities on their credit cards just to get through the month. (You’d be amazed at how many parents have to do this!)”
His father’s willingness to share that secret points at the danger of silence on financial matters. What if Carroll continued to assume his parents were wealthy — perhaps effortlessly so? How would that have influenced his own decisions? What if he decided he’d never measure up?
Talking about money moves individuals closer to financial literacy and farther from costly effects of fewer options and decreased financial impact. A 2020 National Financial Educators Council survey shows “financial illiteracy” costs an average $1,634 per American adult, due to poor saving and spending, credit card abuse, bad decision-making and more.
Fraud is another major cost. People who lack financial literacy pay for things like unnecessary credit repair services and predatory loan products.
Fraud victims are often unwilling to speak up when duped or believe nothing can be gained from sharing. Some also believe they’ll be judged for proving a stereotype. As a result, reported incidents likely represent a fraction of actual cases.
Even so, reports of fraud rose in nearly every category during the COVID-19 pandemic, costing $382 million in the United States alone, according to the Federal Trade Commission. The Association of Certified Fraud Examiners reports a 12 percent spike in insurance fraud, in the largest category, and predicts cybersecurity fraud will post the largest losses.
Karris Golden is a Gazette editorial fellow. Comments: [email protected]