It's November, which for most people means it's finally appropriate to start playing Michael Bublé's Christmas album. But, for others, it's also Financial Literacy Month. No disrespect to my many friends in this field, but I have no idea who decided that November was the best month to start teaching people and talking about money. I mean, all everyone I know is thinking about (myself included) is which holiday drink to buy at Starbucks, ignoring all financial logic about its exorbitant cost.
Having worked one-on-one with dozens of personal finance coaching clients over the last three years, taught many money management workshops and events, and spoken on several panels on the topic, here's what I have to say about financial literacy...it's not about what you know - it's about what you do about it!
Financial literacy is a verb
Socrates, one of history's most notable philosophers and thinkers famously said of knowledge, "I am the wisest man alive, for I know one thing, and that is that I know nothing". This same notion is also found in the Bible, "Anyone who claims to know all the answers doesn’t really know very much." (1 Cor. 8:2, NLT). It was even echoed by Shakespeare, saying "The fool doth think he is wise, but the wise man knows himself to be a fool.” So, what does this have to do with financial literacy?
In my years of personal financial coaching and teaching, and even prior to that, working as a financial writer, I found that those who think they know about money management, investing, and personal finances are usually the least likely to actually implement what they know. Arrogance becomes their biggest barrier - a mental hurdle preventing them from getting practical advice, getting on and sticking to a consistent financial plan.
I've encountered plenty of "know it alls" in my time as a personal finance coach. They didn't see any value in working with a dedicated financial coach because they "already knew what to do". Which begged the question; why do professional athletes and swimsuit models work with fitness trainers? Why do CEOs running multi-million dollar corporations work with leadership or business coaches?
Know, and do, the money basics
Here's the deal...the honest truth about financial literacy. Are you ready?
You really don't need to know that much about money to be financially successful!
True financial literacy is understanding the basics. How to avoid debt, cash-flow your life and/or business, save effectively, invest consistently, give generously, and pay as little in taxes as possible. That's it!
And, before you start freaking out, rest assured that the principles that apply to one area of your money often carry over into other aspects of your financial well-being. For example, cash-flowing your life through your earned income, and living within your means, is a great way to avoid debt. Avoiding debt then creates more margin in your budget to invest in starting a business, or in the stock market. That means you'll likely have more money in the future to be able to give more generously, and save more effectively. And so on, and so forth. It truly isn't as complicated as "seasoned financial professionals" make it seem. You don't have to be a Wall Street or Bay Street investor to be "good with money", build long-term wealth, and leave a positive legacy for your family.
Pro tip: Get over yourself
So, what's my final verdict on financial literacy? Get you some - seriously! You're not "hot shit" enough not to. No one is!
Maybe you're constantly carrying a balance on that credit card, dragging that student loan year over year because it's "cheap debt" or "good debt" (not true!). Perhaps you're blissfully ignorant on what an ETF or the S&P Index is. Or, you're unsure how to save on taxes. Whatever the case may be, it's time to attended workshops in your area, listen to financial podcasts, hire a money coach, or simply read more about the topic.
Financial literacy is important. It's necessary, and it's good for you. But, ACTUALLY DO THE THINGS THAT YOU'RE LEARNING! I don't care if you have an MBA in Finance, if you aren't implementing the information, what the hell is the point? I've had graphic designers, stay-at-home-moms, and university students as coaching clients with more money in the bank than some of the most financially educated people I know.
What are some of the best money resources that have help you gain financial literacy? What books have your read? Or, which financial podcasts do you recommend? Comment below and share your thoughts with the rest of the Paper & Coin community!