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The Future of Financial Literacy
The media we consume, the people we connect with, the knowledge available to us is all at our fingertips. This holds true for modes of education, too. If someone wants to learn more about a topic, like personal finance, there are far fewer barriers to that information than ever before. A quick Google search will produce an endless database of resources, tools, research, and articles. Information is disseminated much more quickly and efficiently than ever before. Yet, the reality is that technology at this level has been around for less than 30 years.
When the world wide web went live to the public in 1991, everything changed. But what was once heralded as revolutionary now seems like second-nature. We go about our lives while sharing our knowledge, stories, and instagram-worthy brunches to a digital platform—with access to it 24 hours a day, seven days a week.
So the question is this: How can financial educators adapt to this ever-changing world and, more to the point, how can they take advantage of these innovations to deliver more impactful services?
Technological innovations hold great promise for personal finance. Here’s a look at the contemporary landscape of financial literacy education, as well as a peek at what the future holds.
Financial Education is Digital—Embrace It
Financial education has become increasingly digital. (But don’t discredit good ol’ fashioned financial literacy books!) Instead of in-person, one-on-one counseling, educators have migrated their content online.
We spoke to Jeffrey Cammack—an online educator inside finance, specifically contract-for-difference (CFD) trading—about the most popular online education formats. His experience in education started as an English teacher to business executives. After teaching himself about finance, he moved to CFD trading, where he has been for about 10 years while continuing to trade.
Before diving in, let’s look at modes of education in terms of what they provide to learners. Psychologists have developed several different models to look at the ways in which we learn the best. One such theory, the VARK model, identifies four types of learners: visual, auditory, read/write, and kinesthetic. Cammack talked about three main forms of online education within the investment space: basic online education, video education, and webinars. These forms of education play into different strengths of VARK model learners.
Basic education consists of self-guided, text-based learning, such as articles, courses, worksheets, and books. Read/write learners are partial to text both online and in print, so they will appreciate information displayed as lists, definitions, and graphics. Cammack made a useful point, however, that these tools may not be best for all learners since “there is no pushback; no engagement.”
Unlike text, video education is “easier to absorb,” said Cammack. Visual and auditory learners will thrive with strong imagery and audible presentations.
“I find that people drop off after a while because they are just too difficult to spend more than 10 minutes listening to,” Cammack reiterated about the low engagement style.
Webinars are video education 2.0. These online seminars benefit from allowing presenters to interact with their audience through sharing documents and links, discussions, and Q&As. Webinars provide something for all four types of learners. Kinesthetic learners, especially, prefer interactivity from polls and surveys.
“We have all had that great professor who has captured our interest and made us realize that we can succeed,” said Cammack. He encouraged educators to “[i]nstil that sense of self-belief,” by engaging people through webinars and making their topics interesting.
“That is what we need if we are going to promote [financial] literacy online,” he said.
Types of Technology to Aid Financial Educators
Inevitably, technology will continue to play a major role in shaping the way we teach financial literacy. So how can educators stay on top of tech and use it to their advantage?
Financial education must not only use technological resources to reach students, but it must teach about those technological tools. For instance, consumers need to know what financial websites can be trusted, what financial apps will facilitate their money management, and how digital messages, like ads, are impacting their spending behavior and mindset about money.
#1: Mobile Banking and Apps
Going forward, we’ll see an increase in the number of digital tools and apps available to consumers as startups continue to disrupt the financial industry. This is good news. Typically, new ideas mean better customer-focused experiences and cheaper or more cost-effective services.
We spoke to Ena Zheng, the co-founder of Indigobank, a startup that’s improving the future of financial literacy. Indigobank is a free FDIC-insured banking app whose customer base is families looking for financial education tools to prepare teens for financial independence.
Personal finance education is still slowly being mandated in state high school curricula. As a result, parents and educators are turning to digital resources to close the gap.
“Only 17 states in the U.S. require high school students to take a course in personal finance and many argue whether it’s also too little too late,” Zheng said. “For many parents, teaching these essential life lessons is a daunting task requiring time, research, and tools that are not always readily available. As a result, teens are not developing the necessary skills they need to achieve financial independence.”
To fix this, Zheng and her team built their mobile banking platform with teens in mind. Like Indigobank, several online and mobile banking apps are innovating personal finance education by catering more directly to consumers and their families. Why? Because “[w]e believe that financial empowerment will lead to happier and successful lives,” said Zheng.
“We offer teens their own debit card, a high-interest savings account, a spending account, and an app that is built to help teens establish financially responsible behaviors as they're using it,” Zheng said. “Teens get the freedom to make their own choices on how to earn and spend their money,” she said, adding that “[t]hese interactions help them establish financially responsible behaviors to truly become financially independent in the future.”
“For parents, we offer the most convenient way for them to give teens access to spending money while teaching responsible habits,” Zheng said. In fact, all of these services can be set up within a few minutes and with no minimum balance required or monthly fee. Parents are also able to set up a virtual job board in order “to encourage their teens to earn their own money on the side.”
“[W]e are innovating the banking experience for our future generation,” said Zheng, adding that they’re “transform[ing] the conversations parents and their teens have around money.”
It’s important to keep in mind that digital banking is a whole new way of conceptualizing money. Some believe that it makes money less tangible and therefore easier to spend. Younger generations, especially, need to learn how to handle their finances in a digital world.
According to Jim Wasserman, a retired teacher of econ and media literacy, the reason that “money is becoming more ethereal” is due to auto pay sites such as Venmo and Paypal. Although digital banking is convenient, “studies show we spend more the less tangible money is (we keep re-spending the same $100 we think we have),” Wasserman said. “Therefore, we need to teach young people habits of intangible money management.”
#2: Streaming Services and Social Media
Young people are spending an increasing amount of time receiving their entertainment from streaming services and social media. These services, however, have the power to drastically influence financial behavior through the messaging of influencers, targeted ads, and viral content.
Wasserman weighed in about how financial literacy education is most meaningful when it’s tailored to the ways in which young people are getting their messages about money.
“I used to use a lot of TV ads in teaching media/financial literacy, but kids don't see as many TV ads with streaming sites/bundling packages (Netflix or the imminent Disney channel),” Wasserman said. “Educators need to use those services as their education sources.”
“For example, many sites use bundling (such as Disney service coming), where, instead of offering either X or Y product for $5, they offer you BOTH for $9,” he said. “Seems like a savings, but if you were never going to use Y, you paid too much for X.”
Similarly, “marketers are investing more in viral (peer to peer) marketing that is spread through social media,” including Facebook, Instagram, and Twitter. And with uncertain privacy laws, “more data [is] being culled so that appeals to spend are more personal (and alluring).”
Personal finance educators need to teach young people how to be critical of the information they’re consuming, in addition to equipping them with tools to resist online asks to spend. According to Wasserman, this is critical “as people are living longer so that $1 spent today impulsively denies someone over $5 when they retire (and that can add up).”
#3: Worldwide Webinars
Jeffrey Cammack spoke further about the merits of webinars, which he sees as the future of financial literacy education. Although he doesn’t believe the finance industry has figured out for themselves what the future will look like yet, he is confident that the format will live online. This is a popular sentiment among personal finance educators, from private companies to non-profits.
“Regardless of what we are teaching people in finance—from personal finance to investment—I think the future is in webinar formats,” Cammack said. People across the world can connect and share knowledge in webinars; bridging accessibility in the education gap.
The key to a successful webinar? “Get an animated presenter who can keep learners interested and engaged,” he said. Remember, webinars have elements that appeal to all four types of VARK learners, so use them. Format-wise, use graphics, text, audible lectures, and interactive surveys, discussions, and worksheets. Make sure that “[e]ach webinar [has] a topic, and build upon previously discussed principles.” The best part is that these webinars can live in an online archive, available at any time to clients or members.
According to Adam Ritt, director of communications at the nonprofit BetterInvesting, more people are making the switch from in-person teaching to a webinar format.
Ritt said that “BetterInvesting has greatly expanded its online financial education over the past decade.” This includes moving from providing seminars largely in person to hosting webinars. “Using a webinar platform, we host stock studies using our analysis tools, seminars on financial planning and monthly roundtables on general investing topics. The medium has steadily gained acceptance among our members."
How does BetterInvesting keep their members interested?
“We try to make the sessions as “live” as possible, without scripts and with periodic polls of participants and breaks for questions,” he said.
In fact, “[m]any people become quickly overwhelmed by financial education, and future models will need to have increased engagement by participants so that seminar leaders understand when they’re going too fast (or too slow) for the audience,” he said. Further, “[p]articipants should be able to use tools that reinforce the financial concepts during the session, and ideally, the seminar leader’s support staff would be able to provide feedback regarding the participants’ understanding of the material.”
Jeffrey Cammack is the editorial director and COO of Schlossbrink AB—owner of the tradeforexsa.co.za brand. Cammack has been a Forex trader since 2007, having first started marketing complex investment products in 2006, narrowing his focus to CFD and Forex products in 2010, and then journalistic reporting about macroeconomic issues and currency analysis from 2012. His educational background in communications has given the organization strong editorial direction and clear, expressive, and actionable mentorship to its readers. Cammack’s career in financial product marketing, education, and analysis now span more than 12 years. You can find him on LinkedIn at @JeffreyCammack.
Adam Ritt joined BetterInvesting in 2002 as the managing editor of BetterInvesting Magazine and currently serves as the director of communications. He formerly was executive editor of Iron Age/New Steel Magazine. His career includes tenures at Chilton Company, Disney, and Reed Elsevier. He has a bachelor’s degree in economics from Northwestern University and a master’s in journalism from Northwestern’s Medill School of Journalism.
Jim Wasserman taught economics and media literacy for over 20 years. Retired from the classroom, he continues to write on education, economics, media literacy, and financial literacy. He has a three-book series—“Media, Marketing, and Me” (teacher’s guides for introducing media literacy and behavioral economics to elementary, middle, and high school students)—coming out this year. With his wife and two feline overlords, he also maintains a blog, yourthirdlife.com, about wandering and wondering about the world in retirement.
Ena Zheng is the co-founder and CEO of Indigobank, a mobile banking and money management app designed for the younger generation. Prior to Indigobank, Ena was the COO of PandaDoc, a document automation SaaS company where she oversaw Operations, Customer Success, Finance, and HR. Before joining PandaDoc, Ena served in various management positions in banking, operations and sales. As a Mom, Ena is passionate about building a better world for our future generations and believes that everyone deserves to live happy and financially healthy lives.