It's not "financial literacy" it's "financial capability"
By Dian Vujovich
Oops. Looks as though I wasn’t in class the day that President Obama signed Executive Order 13530 creating the President’s Advisory Council on Financial Capability. I knew that April was the month chosen for all who care to focus in on making American’s more financially astute but missed the day the wording changed from “literacy” to “capability”.
I’ve always had a hard time with the term “financial literacy”. It struck me as a title that was way too boring for a subject that’s oh-so important in our country: money and the saving, making and management of it. “Financial illiteracy” would have played better, if you had asked me. But, no one did. And then came Obama.
Earlier this week I attended a session titled “Financial Literacy: Investing in a Lifelong Skill” at The International Economic Forum of the Americas at the Palm Beach County Convention Center. It was during that presentation I learned—from a Canadian—about the change of wording.
“Previous administrations have used the term financial literacy but it was President Obama who changed the wording to financial capability, ” said Gary Rabbior, president of the Canadian Foundation for Economic Education.
Once a teacher, he understands the challenges of teaching young people the necessary skills of money management all too well. And, told the audience that reading about all things financial doesn’t really translate into knowledge that can be put into practical everyday use.
And he’s right.
A good example of our non-transferring knowledge from book learning to practical use can be summed up in one word: budget. How many times have we all heard that budgeting is a must if you’re to wind up with a healthy-sized nest egg and be a savvy investor? Yet, in reality, very very few people ever create one or stick to it if they have.
“We pay lip-service to this subject that’s part of a lifelong learning process, ” says Rabbior adding that what financial educators need to do is combine “knowledge with engagement.”
Remember that when you’re trying to figure out how your kid might be able to define what an APR is but, doesn’t have a clue as to why it’s important to thoroughly understand. Or, know how it impacts them with respect to all the debt they may already have accumulated or are likely to encounter during their lifetime.
Back to Obama. He created the President’s Advisory Council on Financial Capability (PACFC) on January 29, 2010 and designated April as National Financial Capability Month.
As for the combo of “financial” with “capability”, I have to admit that the term resonates well with me. The first time I heard it was like an “Ah-ha” moment. And instead of being turned-off to financial learning, these two words together seem to open up my mind to all sorts of money possibilities and opportunities. May it do the same for you and all those you’ve a hand in teaching money stuff to.
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