Imagine you are teaching someone to swim. Most likely, you start off in a controlled environment like a shallow pool with clear visibility of the bottom and sides. You teach basic water safety, the mechanics of floating, how to stay calm in the water, how to exhale underwater, the beginning stroke and treading water. That’s a good place to start, right?
At NP, we have been thinking about how this helps us understand the teaching of financial education, a required pillar of the IDA Program. Teaching someone to swim in a pool is essential to their learning how to swim. But swimming in a controlled environment is vastly different from swimming in a river, where the swimmer has to contend with powerful currents, ice cold water, and slippery rocks (just to name a few).
Our financial lives occur not in a controlled pool, but a river where wage stagnation, tax policies, shifts in labor trends, skyrocketing housing costs, and differential access to wealth building make it harder for many people, particularly Black, Indigenous and People of Color, to successfully stay afloat. Teaching financial education without considering and addressing these broader economic systems, past and present, is incomplete. To disregard systemic-level inequities is to erroneously emphasize that financial wellness depends solely on individual actions.
We believe that incorporating “economic literacy” into IDA financial education does two things. First, it supports participants in considering how economic systems, past and present, impact their individual financial wellbeing and that of their communities. Second, better understanding the economic system and policy choices that perpetuate inequities can draw participants into the collective advocacy needed to build long-term financial security for individuals and their communities for generations to come.
Here’s an example: When teaching about understanding credit, the IDA Financial Education Standards includes instructions to “discuss how traditional credit reporting does not recognize many on-time payments made by lower-income households.” Rather than exclusively focusing on an individual’s role in building a “good” credit score (which carries a lot of judgements about who is “good with money” or “bad with money”), this approach engages participants in also understanding the system and how it functions. Talking about what’s NOT considered in a credit score is as important as learning what is. This can help participants analyze who benefits and who is penalized within this system, and in turn it may change how they feel about their current credit score, or lack thereof. In addition to understanding all of the traditional ways that they might improve their credit score, the participant may begin to advocate for change as well. It might start with their landlord, for their rent payments to be reported to the credit bureaus, or a step further, advocating in support of legislation that increases the accountability and transparency of the credit reporting system.
In order for financial education to fully accomplish the goal of improving the financial wellbeing of participants, we must do more to consider the significance of inequitable economic systems, past and present, as we engage individuals in building stronger financial futures.