Evolving Financial Literacy Into Financial Empowerment

It’s April, which means your mind is probably on three things: warmer weather, filing your taxes and financial literacy.

Okay, maybe you’re not focused on the last one.

Screen Shot 2014-04-07 at 6.53.14 PMMaybe it’s news to you, but April is Financial Literacy Month – which means it’s time to take stock of our current financial situations and look at how we educate and teach the next generation when it comes to smart money management.

So now you know: there’s an entire month focused on finances.  But just how impactful is a single month dedicated to financial literacy?

Financial literacy means exactly what you think it does: it’s the ability to understand how money works in the world.  It’s about knowing how money is earned, managed, saved, invested…but that’s where the word “literacy” falls short.  Literacy implies memorization and the ability to read and write on paper. Literacy is about information and it lacks the critical aspect of application and the necessary change in attitudes and behavior to make a difference.  And that’s why we need to evolve Financial Literacy Month.

Financial literacy and financial education are an absolutely necessary foundation to creating a generation of smart, savvy money managers.  It’s the equivalent to driver’s Ed – before hopping behind the wheel of a car, it’s important to have some knowledge and training under your belt.  But when it comes to changing behavior, what matters most isn’t just the information.  What matters are things like a sense of self-efficacy, a feeling of confidence that you know what you’re doing and the ability to apply those lessons in the real world – to get behind the wheel and put that knowledge into action.

Students viewing technology

That’s where the idea of financial empowerment comes in. Unlike basic financial literacy tools, financial empowerment strategies don’t just educate: they empower, embolden and equip someone to make long-lasting changes in their life. They turn information into action.

A shift toward financial empowerment means a shift from memorization and information overload to action-oriented and simulated application. And that’s very different than just “literacy.”

So as we think about Financial Literacy Month, there’s a strong argument to evolve from “Literacy” to “Empowerment.”  Now the next thing that needs to go is the word “Month.”

Consolidating efforts to focus on a single month of financial education can be effective.  It provides the biggest awareness punch and it’s easier to put forth a lot of effort in a discrete timeframe.  But why limit the effort to just 30 days of financial health?  Why not make financial empowerment a consistent part of the education process?  Why not create a whole movement focused on promoting smarter money habits that impacts a student across their entire lifetime? We know that behavior doesn’t change overnight.  And we know that the moments where students need help managing their money doesn’t just happen in April every year.

Financial Literacy Month has served a very valuable purpose: it’s helped create awareness around an incredibly important issue and raise up the need to teach students about money management habits at a young age.

But maybe it’s time to extend the concept of Financial Literacy Month and to focus on something bigger, better and more meaningful: a Financial Empowerment Movement.