There has been a huge growth of financial literacy initiatives in the past decade, some aimed at children and youth.  Most recently, Stefania Moretti’s MoneySense article “Parents and teens want financial education in the classroom” highlighted this growth with statistics from a variety of sources throughout Canada.  Considering the heightened level of concern regarding the baby boomer generation’s ability to finance their retirement years it’s not surprising that many hope the next generation will better manage their financial house.  Offering financial education makes sense if it truly can increase financial success.

Unfortunately there’s no evidence that financial education actually results in improvements in our financial behaviour.  No studies on financial literacy have provided convincing evidence of any sustainable financial behaviour change[1].  Currently we have no way of knowing if this is the best way to prepare the next generation for their financial obligations.  Our youth will face a far more complex financial world.  Consider changes such as the emergence of electronic currency[2] and the decline in availability of defined benefit pension plans.  The youth of today will be making financial decisions throughout their adulthood that are impossible to anticipate, much less prepare for, based on current policy and regulations.  This means that financial literacy programs in our schools are insufficient to prepare students.  After all, their retirement planning needs will not be met using today’s techniques.

The suitability of financial literacy programs in our schools is also questionable because of the rapid decay of knowledge.  Learned information becomes obsolete very quickly[3].  Empirical evidence shows that decay occurs after a certain lapse in time regardless of the educational approach.  Financial knowledge is likely no exception to the knowledge decay phenomenon.  Adding financial literacy to the school curriculum probably won’t do any harm but it’s unlikely to have any long lasting effects.

Possibly financial literacy education is the wrong goal to pursue if the intention is to help youth prepare to manage their financial futures.  As our financial world becomes increasingly innovative and complex there is little chance that today’s knowledge of financial matters will have much bearing on the future generation’s financial decisions.  A curriculum that offers critical thinking methods[4] may be the better approach to financially preparing our future generation of retirees.

*photo from OpenClips via Pixabay


[1] D. Fernandes, J.G. Lynch, R.G. Netemeyer, Financial Literacy, Financial Education and Downstream Financial Behaviors, October 8, 2013.

[3] Samuel Arbesman, Be Forewarned your Knowledge is Decaying, Harvard Business Review, November 5, 2013  http://blogs.hbr.org/2012/11/be-forewarned-your-knowledge-i/