A Few Thoughts on Financial Literacy

Tim Hartford, writing in the Financial Times on personal finance education, makes reference to a curious band of financial literacy skeptics.

Hartford does a kindness to these wayward souls by not quoting their discredited dogma directly in his piece, thus allowing their ill-conceived theory -- that financial literacy degrades consumers' money management skills -- to maintain a veneer of credibility.

Financial literacy is not perfect. It is not, nor has it ever been, a silver bullet for ensuring consumers aren't taken advantage of or make their own poor decisions. And yes, a few financial literacy programs are nothing more than a collection of outdated brochures akin to what you find in a high school guidance counselor's office touting the exciting career opportunities as a clerk/typist.

But there are many outstanding financial literacy programs run by companies, non-profits and government agencies. And to deny their clear success, and worse imply that they have a deleterious effect, is ludicrous.

These farfetched conspiracy theories are strikingly akin to those who believe that routine childhood immunizations are more dangerous than the diseases they prevent.

What rational person believes that learning how to make a meaningful budget, understanding the wise use of credit, maintaining responsible spending habits and saving aggressively for your future is a bad idea?

It's time to close the book on giving credence to this fringe philosophy so that our collective energy can be spent on designing the most effective educational money management programs.