[From Savings Revolution blog, 12 November 2011, with Kim Wilson]
Along side the buzz of financial inclusion hums a discussion about the poor mastering the knowledge and skills to improve their financial lives. The discourse, droning with terms like financial literacy, financial, education, financial capability, financial fitness and even financial entertainment, is confusing. What, we wonder, is the difference among these variations-on-a-theme and why might those differences matter?
Some terms refer to states of being - “I have manageable debt, can cover household emergencies with savings, and have the acumen to make new tools and technologies work for me.” Others refer to levels of understanding – “I know how to compare interest rates.” Yet others refer to strategies that enable struggling people to achieve these states of being and understanding - “They need training to learn good habits,” or “They must be nudged by savings groups, prizes or video games to make good choices.”
Beyond the lexicon is a deeper set of questions about “Financial X”, with X standing in for what one decides to name the issue. Financial X is expensive. Someone must bear the costs making it happen and someone must make it happen. Is financial X the responsibility of the consumer, the government, the financial service provider, or the volunteer? To get at the bottom of these questions, we will be asking a few experts to weigh in in subsequent blogs. W e are sure our readership includes some of that expertise. Please write us:
And for savings-groups aficionados, are groups themselves engines of literacy or do they need more education? Again who should pay for it? Which of these concepts and labels appeals more to you? Which seems more important, more pressing, more actionable?