Arguments for and against financial literacy education: where to go from here?

Abstract

Currently, everyone is brandishing financial literacy education as the answer to the global personal financial crisis. However, there are a few advocates against financial literacy education. There is contention whether financial literacy education actually leads to effective financial behaviours. The purpose of this theoretical article is to state the various arguments for and against financial literacy education and suggest possible guidelines for interventions by governments and institutions in an effort to increase financial well-being. There are no easy answers to this complex problem and financial illiteracy should not be presented as the sole culprit. Basic financial literacy education is needed to manage day-to-day finances; however, specialist areas such as investments and retirement planning should be left to professionals. It is suggested that financial literacy education should focus not only on cognitive factors but also on non-cognitive and affective factors that might override rational decision making.