Is financial education really the key to financial success?

Financial education is the key? 11

Here’s something that really upsets me sometimes - people saying that education is the key to financial success.


“- How come basic financial education isn’t offered in high school? So many problems could have been avoided for us average people if teachers showed us how to budget our money and avoid high interest debt of credit cards. Everybody would be responsible with money, nobody would go into debt, and payday loan outfits would go out of business! Right?”

Financial education is the key?

Financial education is the key?



Honestly, can you really blame lack of information for our pathetic collective personal finance savvy? And I do mean it’s pathetic on average - we borrow too much, we spend too much, we don’t invest enough, and we rely on our government come retirement. Judging by the recent news stories, we’re borrowing more money than ever before and there’s no sign of stopping it.

But in reality, we’re literally swimming in the ocean of information on how to improve our finances. Millions of books are being printed every year that tells us not to borrow, spend less, invest like pros, and you won’t have to eat cat food in your golden years. There are thousands of websites that will walk you step by step through creating your first budget. Hundreds of blogs will tell personal stories of people who changed their lives financially by making positive changes. We have TV shows about good financial habits, radio shows, podcasts, entire sections in Chapters and local libraries, even computer games. How can anyone blame lack of education for our sorry state of affairs?

Yet without fail, somebody always says the magic words - “This wouldn’t be a problem if people were more educated. Education is the key!”


No, education isn’t the key. Motivation is the key.


We all know what to do. We all know that if you borrow money, one day you’ll have to pay it back with interest, yet we borrow. We all know we have to have an emergency fund strictly for emergencies, but we fail to save up because something more important comes along - like the need for a new BBQ for your backyard. We all know that paying yourself first is important. None of the books about personal finance really tell us anything new - we already know what to do, we just don’t do it. Lack of education isn’t the real problem, lack of motivation is.

Just like we all know how to stay in shape and not get fat. Since last year, I’ve lost almost 50 pounds by hitting the gym few times a week, and eating proper nutritional meals (although funny tasting since kale is involved). I even started jogging here and there - and that’s coming from a guy who never run in his life except maybe this one time I heard “FREE PIE!”. Now, do you really think I didn’t know how to lose some weight till my mid thirties and suddenly became aware of it? No, I knew that eating properly and staying active will get me there. I simply didn’t want to do it and lacked motivation until one day. Lack of education was never an issue.

If anything, we have too much information. Should you pay off the credit cards or should you buy your own home? Millions of people will tell you one thing; another million will tell you the other. Should you put your money into TFSA or RRSP? Five thousand contradicting news stories will compete for your attention until you give up and run away screaming thus resorting to doing nothing. It’s becoming harder and harder to blame lack of financial education, don’t you think?


So why do people keep chanting “Education is the key!” mantra over and over again?


Sadly, I think it’s because by blaming lack of education, people mentally shift the blame to someone else.  We love the idea of someone else being responsible for our wrongdoings. Cause if it’s not someone else, we have to face the fact that our sorry state of financial affairs is our own fault. And we can’t simply stomach this idea.

If only those smart teachers explained to kids who are eager to learn everything they need to know about money! Of course, we’re forgetting that kids are not too keen on learning boring books in school and more interested in the upcoming dance party. Perhaps you don’t remember yourself in high school, but I do remember taking numerous classes including French, math, chemistry, physics, literature, and history. Let’s just say if knowing European history was a major part of being an adult, I’d still be screwed in my younger years despite studying it in high school.

Lack of educational programs makes it an easy target because you can also start blaming the government for not including basic financial education into high school curriculum. Oh that dang government, when will they learn. You can never go wrong with blaming the government for everything going wrong in your life.

We even complain that banks themselves don’t educate us on dangers of borrowing money. We complained to the government, and talking heads in Ottawa now force all credit card companies to print in small letters “This will take you 156 years to repay if you only make minimum payments” on our credit card statements. But this year will borrow more money collectively than ever before even after all this education and vital information on dangers of borrowing. Clearly, being informed doesn’t stop us from doing it.

So, for the love of everything that is holy stop blaming lack of education for how messed up our finances are. We all know what to do; we just don’t want to do it.


  • Brian

    You are wrong. Education is the key. Education leads to motivation. A basic finance class should be mandatory for every HS student.

  • I disagree. Though I do fully acknowledge that a lack of motivation is a significant barrier that prevents a lot of us from achieving our financial goals, I do believe education is another serious contributing factor.

    Those of us inside the personal finance community live and breathe this stuff. To us, it seems obvious that people need to have an emergency fund and, therefore, we may assume *they* know this as well. However, there are a LOT of people out there who don’t know how interest works. They don’t understand how investment fees add up to hundreds of thousands of dollars over a lifetime. Do all of us know that paying ourselves first is important?

    Respectfully, I don’t think so. Again, I understand that it seems obvious to those of us who’ve done these things, but I also don’t think it’s prudent to assume that *everybody* knows these same concepts as well.

    Financial education IS lacking in this country. A lot of people don’t understand how the stock market works. More still have no idea how compound interest makes them money. Budgeting is lost on so many of us. They assume it’s a lot of math, organization and paperwork, and that stuff isn’t fun.

    I wholeheartedly agree with your point that a lack of motivation is a large part of it. And, even if financial literacy were to be improved in this country, that doesn’t necessarily mean that people would begin following this advice. Like you’re alluding to, *people need to want it*. No amount of education will produce a strikingly different financial culture in this country if people simply don’t want to save. 100% agreed.

    However, I do believe that our schools could teach more practical knowledge. Enough with the advanced placement Calculus. Enough reading Shakespeare three or four different times. How about a class that teaches us how the market works, how investments build, how compounding interest exponentially builds our net worth? How debts snowball?

    I had NONE of that education from school growing up.

    Excellent topic!

  • I think there needs to be education to a certain extent to be financially stable. For example, I was taught that debt was normal and plenty of other types of misinformation that I’ve had to challenge myself.

    But I toooootally agree that motivation is the real factor here. Sure, you can know that credit card debt is bad, but until you actually get the cajones to pay it off, it doesn’t matter. You’re still screwed.

    While education is a component of financial independence, motivation and taking action is the most important factor.

  • Absolutely! Motivation is far more important than education because the latter results from the former but doesn’t necessarily trigger the former. The day when people stop seeing debt as readily available money is the day the seed of motivation to get out of debt will be sown. Good post.

  • Natasha Keck

    Thank you! This article is spot on!! You’ve named the elephant in the room.

  • Tim

    Being Motivated to go online and read is Key… Knowledge is power… and the amount of knowledge we have today is infinite!

    Don’t have a computer!? Last I checked the public Library has a SHIT TON of books! Read something! Gain Knowledge.

    Educate yourself!

  • The information is out there if you know where to look. There’s a lot more now than there was five or ten years ago, particularly in the blogging world.

    Most people choose not to pursue an education in personal finance, but I think millions of people could benefit from some basic personal finance education in high school. I had an entire year of macroeconomics in high school, but didn’t learn squat about personal finance until I picked up a book as a medical student.

    Education without motivation won’t get you very far, but knowledge is power.

    Physician on FIRE

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  • I see your point-basically you can lead a horse to water, but… However, I think personal finance requirements in high school would have great value. Lots of books exists on how to do math, yet we don’t make learning math a personal responsibility-we teach it.

  • I wrote about this in a similiar manner a while back on The Financial Diet. The post was about why I don’t feel bad for not starting financial education earlier. Students should be taught basic budgeting and some money lesson but I don’t think offering a full blown financial class is the answer. People make it seem like once we require a personal finance class to be taught in schools that suddenly the student loan crisis, retirement crisis, and credit card debt problems would dissolve. No…

    We learn about physical education all throughout school through mandatory P.E. classes, so why aren’t more of us leading active lifestyles and making good food choices? That’s an analogy I give to compare when people talk about mandated finance classes.

  • Laura

    We know now what to do bc we’re older and learned the hard way. I had no idea in college that paying it back plus interest means I’m out X amount each month for no reason. I didn’t make the connection. If I had known the right thing to do I would have done it.