This background section is not necessary for a teacher to participate in Talk With Our Kids About Money Day—affectionately known as “TWOKAM.” However, interest in financial education is growing, more is happening, and many teachers are taking a greater interest. So, for those of you interested in a little more background, and perhaps doing a little more beyond The Day, this backgrounder is for you. It isn’t going to be a long backgrounder—and, in many cases, will link you to other resources that can provide more in depth material according to your interests.

Financial Literacy vs. Financial Capability

CFEE commonly uses the term financial literacy as it is the term more commonly in use in Canada. In the rest of the world, though, financial capability is more common—and we favour the use of that term. Why? Where literacy tends to denote cognitive development and an emphasis on knowledge we believe that, ultimately, capability lies in behaviour. That is, if we believe that budgeting is important and helpful for people, our end goal is the hope that they will work with a budget. Just teaching “budgeting,” as has been common for years, has not resulted in most people working with a budget. A “Google search” will result in millions of supports for budgeting. The transfer of knowledge, understanding, and awareness, has not had the behavioural impact desired.

We therefore need to focus, not just on the transfer and retention of knowledge, but also skills that result in constructive and personally beneficial behaviour. We believe “financial capability” is a broader term that captures the goal of knowledge, skills, and behaviour more effectively.

But, in the end, if we are working to common goals and achievements, the terms don’t really matter. But the discussion of the distinction helps to make the point re the importance, for teachers, of focusing on the development of skills, and the manifestation of hopeful behaviours, as well as the transfer and application of valuable and relevant knowledge.

Some Quick Points to Think About

Engagement of the Learner is Paramount

Much of “financial education” in the past, while well intentioned, has focused on “people who know stuff telling other people stuff they think they should know”—and often In language that is a challenge to understand. As a result, retention and impact has been less than ideal—and too often the journey of such is in one ear and out the other. It is important to start from where the learner is at, make things relevant to their lives, and move from interest, to engagement, to participation, to retained learning, to ultimate impact. This, of course, takes time—more time than many teachers have. But it leads us to a couple of other “quick points.”

Quality over Quantity

Quality over quantity is important. Research has shown that people, who lack knowledge in a certain area, can quickly become overwhelmed—and, as a consequence, shut down, take no action, or make no decision at all. As an example, is it little wonder that many people, faced with a choice of some 3,000 mutual funds, leave their money in savings accounts? When overwhelmed by choice, they make no choice at all. When teaching about money matters, we recommend you always choose quality over quantity. Teach less and have an impact than put forth a great deal –much of which does not stick.

Simplifying, Containing, and Making It Manageable

The world of money is getting more complex. It is full of more and more options and choices. We don’t need to teach young people about it “all”—far from it. The same applies to adults. In many ways, our challenge as educators is to draw “in” the “world of money”—make things more tangible, focus on the “need to know” stuff—or the most important stuff. We can always expand the learning field later. We recommend pulling in the reins, aiming to teach less, but have more of an impact—and demonstrate the value of learning to the outcomes of decisions and actions.

The Challenge of “Behavioural Goals”

If our goal is as much to achieve behavioural outcomes as to achieve knowledge and skill development outcomes, we often enter into the challenge of looking to change behaviour. For example, if a person has no idea how they use their money and where it goes, and we think it is a good idea that they do, then what is to be done to try and influence that behaviour?

Why Do People Do What They Do?

First, we need to focus on why people do the things they do. What influences behaviour? It might be tradition—doing what has always been done or habits—the influence of parents and family members or trying to fit in or the influence of peers or the impact of media and advertising. The list is long—and the “influencers” are powerful. As an educator, you face the challenge of contending with all of these accumulated factors that ultimately help determine the way your students act—why they do what they do—and the decisions that they make.

Incentives Play a Key Role in Behaviour

What’s an educator to do? Knowledge is certainly a powerful force and by improving knowledge, we should be able to have some impact on the “behaviour register.” A key factor to consider is the power of incentives. Much human behaviour, if not most, is motivated by the quest for reward or benefit—or to avoid penalty and punishment. Pause for a moment to think about things you do—and how you act or behave—and to what degree those actions are affected by incentives.

Considering Incentives Can Be a Creative Challenge for Educators

Incentives can lie in areas other than money. There are all sorts of “incentives” that motivate our behaviour—to be liked, to impress, to love, to help, to be helped, to enjoy, to gain satisfaction, to achieve and accomplish, to be recognized and acknowledged, to acquire influence, and on and on. As an educator, it can be fascinating to think of creative incentives that can engage students and, just perhaps, influence what they do, how they do it, or why. Incentives can play a key role when it comes to financial education.

Participatory Learning—Key to Retention and Impact

Another quick point relates to active participation. Research by Dr. Lew Mandel in the U.S. found that the resource with the greatest impact on student engagement and retained learning in financial education in the U.S. was the “Stock Market Game.” It captured students’ interests and got them engaged, and they seemed to retain a great deal. The problem was—it didn’t teach sound approaches to investing—tending to reward high risk and the highest value investment portfolio. It did show that active participation in learning has an impact. We very much advocate active learning, participation, simulation, role play, etc. when it comes to financial education. We have tried to emphasize this in the lesson plans developed—and we encourage teachers “doing their own thing” to aim for the same.

So there you have it—just a few quick points to think about. There is much more that could be discussed—but we promised to keep it short. We hope this has been helpful. Various links and sources on the website can provide you with additional background information if you are interested.