J.D. Roth, author of Time Magazine’s Business and Money article Why Financial Literacy Fails, notes the reason why we aren’t getting ahead financially is not a lack of financial literacy, but, instead, it is our consistent bad behavior when determining wants versus desires. He writes, “One of the key tenets of my financial philosophy is that money is more about mind than it is about math. That is, our financial success isn’t determined by how smart we are with numbers, but how well we’re able to control our emotions.”
What an interesting notion. Is there too much emphasis placed on teaching the functionality of finances rather than addressing compulsive buying habits? It’s well known that we should spend less and save more, as well as understand financial concepts, but is that touching just the surface of financial literacy?
Financial literacy should be viewed as two-fold: Knowing and Doing. Understanding the mechanics of finance are just the basics. You also must know where you stand financially and develop a road map to financial success, which should include a way that helps you curb impulse purchases. Once you have a plan in place, you must have the discipline to not only put it into action but to follow it relentlessly until you’ve reached your goal.