By Bill Quain
April is Financial Literacy Month. It’s a time to think about, and teach, the importance of financial literacy. However, we can’t just focus on the “what” of financial literacy. We also need to focus on the “why,” because the “why” is far more important!
I once saw a documentary about actors. A young actor was trying to get into character for the part he was playing. He asked the director, “What’s my motivation?” He wanted to know why the character he was playing would react or behave in a certain way.
When we are trying to teach someone about financial literacy, we have to ask, “What’s their motivation? Why do they want to be financially literate?”
Most of us know the basics.
Most of us know the basics about finance: debit and credit cards, mortgages, car loans, budgets, etc. However, simply knowing about, for example, budgeting, doesn’t seem to change people’s behavior. It’s like smoking. Everyone knows that smoking is bad for you, yet millions of people still do it. Everyone knows that spending more money than you have is bad for you, but almost everyone seems to do it!
Financial literacy: What is my motivation?
Many of my readers know that I am a professor at Stockton University, and I teach a course called “Make Money & Pay it Forward.” In the years I’ve been teaching this course, I’ve discovered that my students are woefully lacking in two things: financial intelligence, and the motivation for using it. While it is easy for me to teach them the basics of financial literacy, it’s an uphill battle to give them the motivation they need to use that information. When it comes to financial literacy, facts alone don’t cut it.
So, as I begin each class lecture, I do my best to put myself back into the mindset of a 20-something student. (Of course, this also puts me in danger of humming Taylor Swift songs). I need to remember that my students do not have any experience with finances. Few of them are wondering how they will pay the mortgage next week, or how much food costs. It’s up to me to help them understand their “why” to help them see the impact that the financial decisions they make today will have on their lives, now and in the future.
Along the way, I found a part of financial literacy that can generate some real emotions – credit cards! As it turns out, credit cards are the intergenerational common language of financial literacy!
We’re up against someone else’s motivation.
Credit card companies know their motivation – to make money! Credit cards are issued by huge banks, with almost unlimited funds for advertising. While we attempt to make our younger citizens more financially literate, credit card companies are using sophisticated marketing techniques to ensnare not only young people, but the entire group of consumers.
Free tickets! Do they save money?
Okay, let’s say you are able to “earn” free airline tickets from your credit card company. Let’s take a look at your mindset on that trip. When you go on that vacation, do you pay cash for your hotel? No, of course not. You put the hotel on your credit card. Then, when it is time for dinner, you think to yourself, “Well, I saved all that money on my airline tickets. We now can splurge on our dinner. Waiter, bring me the lobster!” How do you pay for that dinner? You pay with a credit card.
By the way, studies show that when you use a credit card, you spend 12 to 15% more than you would spend if you were using cash. Who makes money every time you swipe that credit card? You guessed it – the bank!
But what about 2% cash back?
Yes, many credit cards today give you a small percentage of cash back if you spend money on that card. What is the motivation of the billion-dollar, marketing-happy, profit-driven credit card company? It’s to get you to spend as much money as possible on that card.
Is your motivation to be free?
In America, our motivation was once to be “free.” Nowadays, it’s to have what we want, when we want it. (And sometimes, it’s to get airline miles for free.) That’s quite a drop in the target, isn’t it?
So, let’s get away from teaching people just the facts. Financial literacy alone isn’t going to make your life better. Aspiring to live free, and to fulfill the promise of the American Dream, is where you need to be headed.
I don’t know about you, but I don’t need to help credit card companies get more stadiums named after them. My goal (and my motivation) is to stride tall, keep my head up, and make each day count toward achieving my full potential.
Tell me: What is your motivation?
Okay, I’m waiting to hear from you. What’s your motivation? Do you want to know how to keep your checking account balanced, or do you want to know how to keep your life balanced? By balanced, I mean that you are looking ahead and taking positive actions every day toward a life of prosperity and freedom. Send me an email at bill@quain.com with your thoughts.
As I say each week, I’ll see ya in the papers!
Bill is a Professor in Stockton University’s Hospitality Management Program. He is the author of 27 books, and a highly-respected speaker. Even though he is almost totally blind, Bill is a long-distance runner and runs the Ocean City Half Marathon each year. He lives in Ocean City with his wife Jeanne, and his Guide Dog Trudy. Visit www.billquain.com or email him at bill@quain.com.
