The Best Way To Teach Financial Literacy

What is the best way to teach financial literacy?

Is it through blogs, books, or courses? Is it best taught at home or in schools? Should it be by trial and error?

While we may not all agree about the best way to teach financial literacy, we can all likely agree on one thing.

There is a serious lack of financial literacy in this country.

This lack of financial literacy is apparent everywhere you look. This country, and its people, are in more debt than ever before. Consumerism is rampant, savings are small, and a growing number of people will struggle to retire.

Although a dedicated army of personal finance bloggers are trying their best to enact change, this blog included, our money trees are struggling to bear fruit against the much more established forest of media and consumption.

Up against such odds, what are financial literacy advocates to do?

While all of the above-mentioned avenues for teaching financial literacy help the cause and should continue, we’ve found that the most effective way to teach personal finance is much simpler.

The Status of Financial Literacy

Much has been made about the lack of financial literacy in this country, and for good reason.

In fact, a large portion of the American public, and the world, can be categorized as financially illiterate. The Standard & Poor’s Global Financial Literacy Survey found that only 57% of U.S. adults are financially literate and roughly a third of adults around the world are financially literate.

This study also found that financial literacy is highest amongst those who are wealthy, better educated, and use financial services. Conversely, it is lowest amongst those with low incomes and less education, as well as women.

These stats paint a dire picture, and with increased access to financial services over the last several decades, it’s easy to see why people are struggling financially in this country. Those without necessary basic financial skills are finding themselves with more debt and at a higher risk of delinquency. This begins a snowball effect, where people make decisions that tank their credit and then are forced to make decisions that further negatively impact their finances.

On the flip side, those who are financially literate are less likely to default on loans and save appropriately for retirement.

Clearly, our country is largely financially illiterate, so what should we do?

Related: 5 Financial Goals for Millennials

Where Do People Learn (Or Don’t Learn) Personal Finance Skills?

If financial literacy is so poor in the U.S., it begs the question: where do people learn their personal finance skills?

And make no mistake, people are learning something. They may not be learning the best practices when it comes to personal finance, but they are learning something from somewhere.

There are three main sources where most learn their personal finance “skills,” but unfortunately only one can be counted on as a semi-reliable source.


Of these three, school is the best venue for teaching personal finance skills. Personal finance teachers are (hopefully) skilled in basic financial literacy and can pass this knowledge on to students before they can make too many financial mistakes.

The problem with relying on schools to teach personal finance is that most don’t. Only half of the country requires high schoolers to take a personal finance class, and many of these “skills” are incorporated into other subjects, such as math and economics.

Another problem with relying on high schools to teach financial literacy to teens is that it may be coming too late.

Kids begin learning about personal finance long before entering school, and their education varies widely depending on who they live with and what they’re exposed to.

Which brings us to our next teacher.


Like it or not, media plays a huge role in shaping our attitudes and beliefs, and personal finance isn’t excluded.

Studies have shown that exposure to media, especially media geared toward materialism and consumerism (aka, ads), tends to shape us to be more materialistic.

While ads have been around forever (albeit they are seen more frequently than in the past), a relatively new and virulent form of media is also impacting your financial decisions.

Social media.

And social media is especially problematic for younger people. A study about social media and spending found that 90% of millennial participants said social media encouraged them to compare their lifestyle to their peers, and about 60% of them felt inadequate because of what they saw. Unfortunately, 57% reported that they spent money they hadn’t planned to as a result of these feelings.

Aside from the fear of missing out, social media also exposes users to even more ads designed to part you and your money.

Media is a poor personal finance teacher, mostly because the sole goal of advertisements is to make you spend money, but it’s a prevalent one.

Even so, the media isn’t the most influential teacher of personal finance.


The apple doesn’t fall far from the tree, and neither does the dollar.

Like most things in life, people learn the majority of their personal finance skills at home through observation and modeling.

This phenomenon, known as Social Learning Theory, posits that children observe the behavior and habits of those closest to them, encode that behavior, and then imitate it. That behavior can then either be reinforced or not depending on the reactions of those around the child.

Thus, the financial literacy of kids (and later adults) will be closely related to the financial literacy of the parents/guardian and close family members in most cases.

But, remember that only 57% of American adults are considered financially literate.

Now what?

The Best Way To Teach Financial Literacy

With family and media as the main and most influential teachers, it’s no wonder financial literacy continues to suffer. It’s also clear that without large systematic change we won’t be able to rely on our educational system to pick up the slack, which may be somewhat too late even if implemented.

Further complicating matters is the fact that money tends to be a taboo topic that most shy away from. This may be especially true when someone is struggling with their money.

Even with financial resources abound on the internet, many choose not to seek out help because they’re embarrassed or scared.

Given these obstacles, what is the best way to teach financial literacy?

Again, widespread systematic change in our country would be the best-case scenario.

This would include financial literacy being taught beginning in elementary school and required in middle and high school. It would also require more regulation and oversight of financial institutions to help ensure that consumers aren’t being taken advantage of and are provided necessary information before making decisions.

However, since the above isn’t likely any time soon the best way to teach financial literacy is simply to lead by example and to be open and willing to talk about money with others.

Leading by Example

Kids learn by observing the behavior and habits of those around them, and that can also be true of adults.

If you have kids it’s very important to demonstrate good money habits, not just to talk about them. Kids will do as you do, not necessarily as you say.

But in general, modeling good money habits for those around you will help them increase their financial literacy as well.

However, for adults modeling good behavior may not be enough, especially when it comes to money. This is because so much of our financial lives are hidden or in the background, and you can only presume so much about the money habits of a person by looking at them.

That’s why the best way to teach financial literacy involves not just modeling but talking.

Start the Conversation

The best way to teach financial literacy is to just start talking.

Talk about money topics, talk about yourself and what you’re doing, ask questions about what others are doing.

Just start talking.

Stop treating money as a taboo topic and start talking. Seek to share what you know and to learn from others that know more or different things. Don’t be afraid to ask questions.

Personal finance is too broad for one person to be an expert in everything, even for those of us who are financially literate. Part of what makes us so is that we are constantly learning new things about money topics, asking questions, and discussing with others.

Those of us who are versed in personal finance topics need to be willing to share our knowledge anywhere and everywhere.

Those of us not versed need to be willing to learn and to seek out information.

If you are one of those blessed with financial literacy, start with your friends, family, and co-workers. Talk about what you’re doing with your money or how you make money decisions. Share things you’ve learned or opportunities you think might be good for others.

Without being pushy, the best way to teach financial literacy is to lead by example and to talk about money.

Related: 5 Tips for Managing a Financial Windfall

Moral of the Story

Financial literacy is lacking in America and around the world despite concerted efforts by the personal finance blogger community to change that.

Unfortunately, we’re battling the unreliable teachers of media and parents, half of whom are financially illiterate themselves.

Financial literacy training in schools is similarly lacking and may be coming too late, after many young adults have already encoded the financial habits learned from parents and the media.

To further complicate matters, personal finance is a taboo topic that most don’t want to talk about, especially if they’re struggling.

Despite the challenges, there are things we can do to improve the financial literacy in this country, and it’s starts with you.

The best way to teach financial literacy is to model good financial habits and to talk about money. Be open and willing to share your financial life with others and offer advice and resources as appropriate.

Normalize money talk and financial literacy will follow.




Tawnya is a 34-year-old Special Education teacher in the sixth year of her career. Along with her partner, Sebastian, she runs the blog Money Saved is Money Earned. Tawnya has worked extremely hard to reach her goals and remain debt-free.

She holds an Honors BS in Psychology from Oregon State University and an MS in Special Education from Portland State University and has had a pretty successful writing career, first as a writing tutor at the Oregon State University Writing Center, and in recent years, as a freelance writer.

Tawnya and Sebastian have a wealth of knowledge and information about personal finance, retirement, student loans, credit cards, and many other financial topics. It is this wealth of tips and tricks that they wish to pass on to others.