An Approach to Financial Literacy

Financial literacy cannot be taught. It is like golf. You have to do it and experience it to learn. You cannot get fully capable by reading a book or attending a lecture, but you can be coached.

A suitable program to improve these skills will involve several things.

Exposure to the basics of strategic planning.

  • Know what you want
  • Know when you want it
  • Know what you have to get it with
  • Know your margin for error
  • Creation of a summary of your biases, preferences, skills, hopes, fears and expectations. These lead to priorities and policies.
  • Exposure to the nature of financial markets, investments, risk, time, tax, inflation, economics, and systems.
  • Exposure to the idea of limits
  • Learn how to design a formal plan. Time set for a decision to mature, define how to measure, have a check person,
  • Learn discipline.

Learn about tactical planning

  • Know what the context is. Limits (laws, taxes, risks)
  • Know what is available to fulfill your strategic goals
  • Know the limits of those tools
  • Know someone who is up to date. Tools change frequently
  • Know how to decide.


  • Implementing what you have decided
  • Know Who is better than know how.
  • Review and reassess

Learning is a bottom up process. They try many things and keep the most successful. Begin saving and investing early. Treat the early smallish amounts as practice.

People cannot deal with an adviser who creates a financial plan for them. It is like teaching and teaching is top down. People remember little of it unless it happens to coincide with some step they were moving on from the bottom up. Advisers, at best, can bring the goals and the variables together in such a way as the client can make decisions about appropriate tactics.

When you teach or command you can not expect that all of the instructions will be carried out, never mind carried out the way they were supposed to be carried out. For example, about one-third of all medication prescribed by physicians is not taken as prescribed and of that third, most of it was not even acquired.

At its center, the client owns the problem and the opportunity. The adviser should help the client understand what is there and bring specific tactics forward for decisions.

For the adviser to be most useful, the client needs to know much more than many know now. Advisers need to learn how to develop client skills.

Don Shaughnessy is a retired partner in an international accounting firm and is presently with The Protectors Group, a large personal insurance, employee benefits and investment agency in Peterborough Ontario. | Twitter @DonShaughnessy | Follow by email at moneyFYI

3 Comments on “An Approach to Financial Literacy

  1. So essentially, to be financially literate one needs in-depth exposure and experience in the following: psychology, cognitive bias theories and their affects on decision making, macro and micro economics, statistical analysis, technical writing, project management, financial reporting and analytics, strategic management, risk management, conflict negotiation, and personal communication skills.

    Now if I could only find my Staples “That Was Easy” button.

    • Not quite. A client needs to be able to understand how the tools fit their plan and why their plan makes reasonable sense. For example with a strategic level decided the adviser can say, “Given your objectives, your resources and your time frame, either of these two methods will help you. We recommend choice A because. Without the strategic level, the client is buying into a blind idea.

      • The importance of developing consistency, discipline and self improvement in our clients is key.

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