Financial literacy is only part of the problem. The Economist, as usual, has a good piece on the subject, but the problem is there’s more that’s not understood re behaviour.

There’s a motivational component, kids (and some adults) just don’t want to learn about this stuff. It’s easier to be ignorant, it takes less effort. Or maybe it’s not as interesting as TV. Or maybe it doesn’t feel good, or feels less good than an alternative.

Hmmm. Let’s look at it globally, why is the US savings rate so low with other nations significantly higher. What is it that makes people in the USA so unreceptive to the concept of savings, is it better appetite for financial literacy in other cultures or a different variable?

I wish I was smarter. I’m of the thinking it’s got to be rational on some level to behave in such a manner, but what makes it rational in the minds of those non-savers vs those elsewhere who are rationally savers?

There is some internal belief system that explains the behaviours but I can’t put my finger on it. If there was a decent level of financial literacy one could argue non-savers are throwing up their hands in disgust, surrendering if you will because they know entitlements and such are so underfunded they are totally screwed –maybe they feel things will be so bad with increased taxes and decreased benefits they are in such a state of depression they don’t want to save.

Or perhaps that’s it, maybe they don’t know entitlements in the USA are so underfunded that they have to be cut (no choice) and that every individual should be saving — it is financial illiteracy to blame after all.

So what can we do, how do we increase financial literacy, encourage kids to learn about money and economics? What can we do to better understand the behavioural issues?

I’d like to do something specifically in this area, if you are working on a project or have an idea for a project in this area please feel free to contact me. I have an idea or two, this is a work in progress. Let’s talk.