Reimagining Financial Literacy: A Call for Emotional and Cultural Intelligence in Financial Education

Published on December 21, 2023

As our global financial landscape becomes more complex, younger generations stand to inherit a world riddled with inequality, debt, and a lack of resources to navigate these mounting threats. Households in the United States grapple with over $100,000 in debt on average, a figure that has steadily climbed over the past two decades, and student loans now exceed $1.7 trillion nationally. Kids growing up today need the tools to understand the economic reality they’re inheriting, but they also need financial literacy initiatives that acknowledge how we got here — and the social norms and cultural pressures that continue to perpetuate poor spending habits.

The prevalent view in financial literacy education is that financial instability is primarily due to a lack of education and knowledge. However, mindset, culture, and historical context play an enormous role in how people approach financial decisions. How are young people supposed to learn to save for the future when they see their governments won’t even plan ahead and invest in preventative measures to combat climate change, pandemic preparedness, or bolster education, for example?

Financial literacy initiatives that don’t adequately address these factors are doomed to fail. In order to succeed, education on financial literacy must take a more culturally and emotionally sensitive approach that acknowledges past and present political context.

We’ve identified the need for this focus in our own communities. Growing up in Brazil, Flavio saw firsthand how a legacy of hyperinflation significantly impacts cultural habits around money today. From the 1980s to the mid-’90s, prices rose dramatically, causing people to avoid saving in favor of spending their wages immediately because, by the next day, the same amount could often buy significantly less. This economic maelstrom fundamentally skewed the way Brazilians perceive and interact with money even today.

In better-resourced countries, such as the United States, different cultural barriers are preventing young people from acquiring the skills necessary to navigate a rapidly changing financial landscape. Aadi has witnessed fellow high school students generally avoid opportunities to learn about financial literacy due to pressures to prioritize classes that will appeal more to college admissions officers.

High school curriculums celebrate advanced placement (AP) courses but imply that mastering theoretical mathematics is more crucial than understanding the principles of debt, savings, or investment that will govern future economic realities. Moreover, social media encourages spending over saving, instant gratification over long-term planning, and consumption over investment. The result of this cultural and educational misalignment is a generation of young adults who, despite unprecedented access to financial tools and resources, are often ill-equipped to make informed financial decisions. 

While the U.S. is the world’s largest economy, the Standard & Poor’s Global Financial Literacy Survey ranks our country No. 14 when measuring the proportion of U.S. adults who are financially literate. From understanding the nuances of student loans to managing the intricacies of credit card debt, many young people in the U.S. will find themselves ensnared in debt’s tightening grip without the adequate resources to navigate these challenges. It’s not enough to offer lessons on the technical aspects of financial literacy; we must ensure those lessons are culturally coded to resonate.

Research on financial literacy in Brazil has revealed that financial education programs should consider behavioral aspects like self-confidence​​. This need isn’t unique to Brazil. The majority of our financial decisions are motivated by emotions rather than logic. In fact, improved financial education can explain just 0.1% of positive behavioral changes that occur. All financial education needs to be customized to consider the often highly emotional elements of financial planning

Access and greater systemic issues play a part, as well — but improving accessibility isn’t only about making financial literacy courses more widely available; it’s about making sure course material resonates with the cultural and emotional realities of those who will benefit from it. To achieve this, we can look at initiatives such as the Global Possibility Network, which utilizes mentoring and counseling to help young people identify their own values and aspirations and set goals accordingly. Instead of utilizing a one-size-fits-all approach, this program empowers people to make choices grounded in a personalized vision of their future. 

Another template worth considering is Scott Crandall’s successful campaign against teen drinking, which utilizes a “social norms” approach to intervention, leveraging actual behavioral data to show teens that many of their peers are already participating in healthier behaviors. Similar to the financial literacy crisis, teen drinking persists largely due to misaligned behavioral norms, not because of a lack of education or awareness. Altering behavior by adjusting perceived norms, rather than simply imparting knowledge, is an effective strategy that financial literacy campaigns may also benefit from utilizing. 

Finally, financial literacy initiatives must consider how to speak effectively to the demographics they hope to reach — via mediums, languages, and communicators that will be familiar. Aadi’s financial literacy app tailored to Gen-Z is one example of this type of solution, as it utilizes a  virtual platform to connect to the digital savviness of younger generations. Oweesta Corporation’s ‘Financial Skills for Families’ curriculum offers another possible template, as they have made substantial strides in equipping Native communities with financial education by providing culturally appropriate resources and tools that address unique values and traditions.  

The prevailing global push for financial literacy has fallen short, but it’s not too late to redirect resources. Universal, template-driven financial education is bound to fail because each person’s experience with money is shaped by their environment, available resources, and cultural context. Instead, financial literacy education must be as diverse and adaptable as the people it intends to serve. Only through a personalized, culturally sensitive, and emotionally intelligent approach can we hope to truly equip individuals with the financial acumen needed for the future.

Aadi Gujral and Dr. Serapiao are Grit Daily Leadership Network members.Aadi Gujral is a youth entrepreneur, advocate, and aspiring financial changemaker. He is the founder of the Foundation for Financial Literacy, which aims to change the way that students are taught financial literacy by creating a curriculum that involves a youth perspective.Dr. Serapiao is a postdoctoral fellow and lecturer at the University of Pennsylvania Graduate School of Education (Penn GSE). He has a master’s and a doctoral degree from the University of Pennsylvania in Organizational Learning & Leadership and is the co-founder of the Penn GSE Global Possibility Network, a global network to enhance youth development using Possibility Development Counselling.

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