Financial Literacy Won’t Solve All Our Problems


The personal finance community is over-enthusiastic about financial literacy, and I get it. The more people know about money and financial services, the better equipped they are to manage their income and financial obligations.

But sometimes there’s a key part of the discussion we’re ignoring: financial literacy doesn’t do any good if there’s no money to manage.

There was I time when I thought financial literacy was the silver bullet to solve everyone’s money problems. Broke? Your fault, you need to budget/save/work harder!

For most of my debt repayment journey, I patted myself on the back for my discipline. I completely ignored the reality that the main reasons I was able to make so much progress were that I had a good salary, excellent benefits, and had pursued an affordable education.

Even though I’m aware of this privilege, I still sometimes only see through my rose-tinted glasses.

As advocates for financial literacy, it is important to check your financial privilege and ensure you are considering others circumstances and how this inevitably changes the ways people are able to manage money. You can’t budget your way out of poverty, and I think some people forget that.

I’ve maximized my opportunities and resources, but I’ve also been very lucky 

I’ve worked hard on my accomplishments, and for that I deserve credit. But, that doesn’t take away from the fact that I’ve benefited from plenty of favorable circumstances.

Compared to American readers, I’ve enjoyed low education costs, virtually no healthcare expenses, and a tax structure that favored my student and recent graduate status.

Compared to other Canadians, living in Alberta meant I had access to both the strongest economy and the lowest taxes in the country. I’ve also never been disabled, laid off from work, or endured any other unfortunate circumstance outside my control.

What does all of the above have in common? They’re all HUGE factors completely outside the realm of financial literacy.

No matter how much you know about money, there are things that can’t be changed with money tips and tricks

It is both great and important to understand compounding interest, bank fees, the terms & conditions of your student loans, and how to budget. But, this knowledge will do little for you if you’re being crushed by an unfortunate financial situation outside of your control.

For those experiencing it, it can be hard to openly discuss the hardships of poverty and other financial struggles. But it is important to be open about money considering it is a huge stressor for most people. In fact, 1 in 7 Canadians live below the poverty line.

There are other ways you can put financial literacy into practice

Staying positive amidst an economic crisis, is no easy feat but it is vital. Things like spending and saving challenges might sound enticing to some, but if you don’t have the means, this does not necessarily mean you can’t take part in firming the grasp you have on your personal finances.

Consider gradually building an emergency fund of stuff, or even reading up on available resources to to better understand the systems that have put you in such a tight place with money.

Focusing on one financial goal at a time is a great way to start gaining more control over your finances, regardless of circumstances. If you’re drowning in debt, develop a realistic and non-straining repayment plan that is doable for you as an individual, rather than living up to the expectations of a capitalistic society.

And, there are always little things you can do like tracking your spending, using credit cards responsibly, checking your credit report annually, giving up impulse purchases, and avoiding paying unnecessary fees. These “little” things, are the most important at the end of the day.

It is important to recognize these 2 things:

  • Financial literacy won’t solve all our problems
  •  Financial literacy is worth it regardless

For many people, financial literacy is the difference between living paycheque to paycheque or becoming wealthy. But I do wish we would stop touting it as the be-all, end-all of personal finance. Because there are people whom it helps a lot less.

Regardless, managing your finances is at the heart of financial literacy. Everyone should try to not get bogged down by the pressure of big savings or aggressive debt repayment. Instead, start with the basics to improve your personal finances. It is bound to make a positive difference!

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18 Comments. Leave new

  • I continue to read your blog for posts like this. It’s so refreshing to hear people acknowledge the role that luck plays in their life – without discounting the obvious and necessary hard work that also factors in. Part of my personal journey regarding finances is to operate from a position of abundance (if you’ll forgive the new wave metaphor) when making my own decisions – including the generosity and empathy toward the decisions of others. Thanks again.

    • Thanks for your comment Caitlin! =) I’ve definitely been lucky… not as much as some, but so much more than others, and it’s something I forget and need to remind myself of all the time. It’s definitely not as cut & dry as the PF community often makes it out to be.

    • It’s not just luck, It’s recognizing privilege and the benefits/circumstances we were born into without any work from ourselves

      And also taking into account that not every career path is paved in gold. I had a troubling conversation with a friend recently who said they would let their loan slip into nonpayment until they made 50k a year. But that’s not a salary people in his career path make for many, many years (and not for lack of trying) and I worried that he was putting his financial future in jeopardy for the sake of an arbitrary number (when I make $ xx, xxx I’ll be fine!) and he just didn’t understand.

  • Totally! Bridget, I love that you are willing to buck the trend when it comes to personal finance. I absolutely believe that there is a place for financial literacy in educating more people and it will help some, but I don’t believe it is the “be all, end all” that many tout it to be.

    • I’m just so tired of hearing about it on blogs. Everyone thinks if we just learn enough we’ll be fine, but knowledge doesn’t make the cost of education or home ownership go down. You can learn your way out of credit card spending but that doesn’t mean everything will magically become affordable.

  • I like how you brought this around to income inequality because I think that’s a very real problem. It’s hard to play to win when the deck is stacked against you.

  • *slow clap* Amen, Bridget.

    I’ve always thought that the “we just need people to be more financially literate!” thing to ring false, but I have never articulated it clearly. It’s condescending to presume that people do not understand financial concepts, and it’s paternalistic to think that “we” (personal finance bloggers? relative-privileged people? I’m not sure who the “we” would be here exactly) need to swoop in and just teach the masses.

    Access to information is not the problem. I think we can agree that many people could significantly improve their financial lives knowing or understanding a very few, basic concepts. Compound interest isn’t that complicated, and if you can’t do the math yourself, there’s an app for that.

    The only reason there is more than one PF blog post that can be written is that the tricky part is human behavior, not math. Understanding, altering, and influencing the behavior of an individual or a group is a lot more complicated.

    Sorry for the rant, but this topic really burns my bacon.

    • Is it possible this is all a weird conspiracy of the upper-upper-class? “If we make the poor think they’re responsible for their situation, we don’t have to take the blame for exploiting them!”

      I just see so many people, particularly families, writing blogs or leaving comments on sites like Gail’s about how happy they are to have stretched a $30,000 income over a family of 6 or whatever, and they’re ecstatic but all I can think is “you shouldn’t have to fight this hard”

  • I really agree with this, and regularly want to slap people who have similar (or much more lucky) backgrounds as I do who say things like “Well, I worked my butt off to get where I am, why can’t they do the same?” Maybe they are working their butts off as well, but the results aren’t the same.

    The problem is… even after we stop condemning people, their situation is still largely the same. Some shifts in politics could help (esp. in the USA), but… what is the answer? Financial literacy is something that could help SOME (mostly people who aren’t all that badly off), but what about the rest?

    • I think it’s easy to have the blinders on when it comes to your own circumstances — you remember struggles because they were so painful, everything that was easy you often take for granted =p

      It’s definitely a political and I would even say cultural issue. We can teach everyone how to count and spend less than they earn but until things like healthcare and education are equally accessible how can we stop people from going broke to afford them?

  • I think part of the reason this idea is so prevelant is because you get people who have issues with money, and thier excuse is “nobody told me that” or “they never tought us that in school.”

  • You make some excellent points here. There is often a problem in the personal finance sphere of not looking at poverty and low-wage lifestyles complexly. I think part of it is that writers are trying to address an audience that hasn’t had to live with long-term monetary strife, but aren’t communicating that fact very well. It is easier to turn it into a mantra of “spend less and make more!” when you aren’t addressing the fact that obtainable jobs for the lower class often are minimum wage and that the cost of living is continuing to increase.

  • You are so right. Financial literacy is important, but you can know everything there is about money and still have awful circumstances. To avoid that you need luck, preparation, privilege and some hard work. Thanks for your thought provoking post!

  • Great, great post! So many people don’t know what it’s like trying to squeeze blood from a stone. Financial literacy is so important, but like you said, if the money just isn’t there to begin with, there’s only so much one can do. That said, DO IT! Do what you can with what you have! I’ve known people (okay, my own parents) who started out the right way and then had their spirits broken by prolonged job loss, medical expenses and more. They worked and did the frugal thing for decades and have little to show for it. I would want to give up, too. When you’re struggling and every penny counts, it is so hard to find the time and energy to look for a way out and do what it takes. I have personally learned a lot from higher income experts, but a lot of people can’t see how that advice can apply to them because they’re in a completely different place. Those are the people I really want to help.

  • This is a great post. I think too many times people just say “save more money and spend less,” but when your cards are stacked against you, it is very difficult and often times seems to minimize the actual problem. Living in the United States, I am living through the very expensive reality of living in an expensive city, while living essentially pay check to pay check, while paying for extremely high insurance premiums, and student loan debts. All the financial literacy in the world won’t change my debt from these three things. Now, it is just a matter of working around them and trying to make the best decisions from here on out.

  • This makes so much sense. Financial literacy doesn’t do any good if there’s no money to manage. Every little bit helps. I earn extra cash watching videos, doing surveys, and shopping online through Swagbucks! Thanks for the article!


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