Enough with the sham initiatives – Gen Z deserve more when it comes to financial education

Money. It’s the one thing most adults lose sleep over, stress over and fight over. Yet oddly enough, it’s the one topic we aren’t intentionally preparing the next generation for.

Nobody is teaching Gen Z to make smart money decisions. And just like the hapless generation X, Y and millennials before them, they are destined to struggle with this critical and impending aspect of adulthood.

It’s absurd that we’ve allowed this to go on for so long.

We all have our favorite fallback excuses, mainly revolving around a lack of time, resources and money (ironic much?)

We’ve made space travel a reality, we have self-driving cars and we’ve split the atom — but somehow we can’t seem to adequately educate the younger generation on what we know is a critical life skill.

We’ve designed ingenious algorithms that can out think humans, we’ve unleashed the full potential of genetic engineering by decoding our DNA, we’ve even found the ‘God Particle’ — but teaching youngsters how to be smart with money seems to be much harder to accomplish, judging from our very lack luster performance in this field.

How much longer we can afford to stick our heads in the sand before this entire situation becomes untenable?

And by many accounts, it has already reached this level. But still we persevere in willful ignorance, or worse, in fin-lit washing.

Fin-lit washing

It’s a term I coined when I noticed this commonly happens in other sectors too.

Similar to green-washing (misleading information about how a company’s products are environmentally sound) and blue-washing (deceptive marketing that overstates a company’s commitment to responsible social practices— fin-lit washing refers to tokenism or marketing that grossly overstates a company’s intention or ability to financially educate its customers.

There are so many companies today who, having realized how emotive this topic is, have jumped on the bandwagon and instituted sham initiatives that purportedly solve the financial literacy dilemma for Gen Z.

There’s no doubt that many of these companies mean well, but making such bold claims without a deep understanding what financial education actually means and how best to deliver it effectively, is blatantly disregarding and disrespecting the needs of these youngsters.

And what makes fin-lit washing worse is that it’s particularly hard to identify.

So long as these entities use key terms — like saving, budgeting, investing and of course now, cryptocurrency and NFT’s — sprinkled with generous amounts of ‘gamification’ and being ‘tech-enabled’, it ticks all the proverbial boxes for the non-initiated and unsuspecting masses who aren’t able to single out these sham initiatives.

So now we have Gen Z who aren’t really financially literate but because of this brilliantly executed fin-lit washing, believe they are. That’s a double whammy that many of them will fail to recover from.

It gives them a false sense of confidence and bravado that encourages them to take on risk they don’t fully comprehend, or to engage in speculating when they believe they are investing.

It’s imperative that we stay vigilant for signs of fin-lit washing. Noticing when claims are too good to be true, or are vague and non-specific, verifying information and educating ourselves about what financial literacy truly means is a good start.

What to look for

Financial education isn’t a subject we want the younger generation to have just a passing knowledge of. This isn’t about choosing a program that’s just satisfactory. Their knowledge and expertise on the subject will influence so many critical aspects of their lives. ‘Satisfactory’ won’t cut it here; the program needs to be exceptional.

We don’t want someone playing fast and loose with the foundations and principles of smart money management and investing. The programme needs:

  • To have been tested on thousands of students and be better for it
  • To go far beyond just building awareness to focusing on the implementation of the learning
  • To challenge Gen Zers to think differently and then act in accordance with their beliefs
  • To be trusted that there will be no hidden commercial agendas youngsters will be subject to.

There’s been a lot of talk about the net effectiveness of financial education programmes, which according to some studies is marginal, if non-existent. Frankly, that’s not surprising. If we look at the way many financial education programmes are run, in terms of the content they cover and their delivery process, it’s a far from surprising conclusion.

Caveat emptor

Caveat emptor is Latin for ‘let the buyer beware’ – a phrase that holds particular significance when evaluating financial education programs.

From simplistic perspectives and volunteer staff who aren’t trained to teach youngsters to shameless product pushing and content that is unabashedly commercially colored, there is a lot to beware of. Caveat emptor!

Then there is the actual content, which is tedious, uninteresting and mainly taught as a maths-based skill. Personal finance isn’t a maths-based skill; it has much to do with mindset, attitude and behavior. Yet behavioral finance and an understanding of the interplay of various socio-economic factors isn’t covered. Caveat emptor!

We should be especially aware of financial education programs taught by financial institutions. According to the FoolProof Foundation website, today’s financial literacy education ‘doesn’t work because virtually all major financial literacy resources are developed or shaped by businesses that benefit when consumers make money mistakes.’ It’s like the fox being asked to guard the chicken coop. Caveat emptor!

A worthy solution

There’s nothing wrong with financial institutions sponsoring financial education programs in schools and colleges; that might be a solution to the budgetary issue most schools claim to have when faced with teaching this subject on their own. The problem arises when these financial institutions flog their own ‘bespoke curriculum’, highlighting their products and services targeted at Gen Zers.

One solution would be to have financial education programs curated and delivered by a vetted independent third party of trained and trusted experts. This would ensure that the students get the benefit of the programs without being subject to implicit or explicit marketing messages. It would also ensure a quality standard and unbiased content.

Financial education, and more importantly financial empowerment, isn’t just a score on a ‘three-question quiz’. While that might be a basic measure, it does not even begin to cover what youngsters to know, understand and use about money.

Especially in today’s time, our definition of what constitutes a financial education needs to change dramatically – it needs to provide Gen Z with deep insights, an evolved understanding and a higher consciousness about money.

This means that an exceptional financial education program needs to go beyond the basic elements that most programs run through. It needs to encompass the new and evolving components of technology, social media influences, neuroeconomics and the aforementioned behavioral finance and interplay of various socio-economic factors.

Rather than giving Gen Z a quick recipe for financial success, it needs to provide them with a solid foundation in personal finance and the basic principles to allow them to think for themselves and make sense of the constantly and rapidly changing financial landscape. It needs to give them a sense of control and agency over their own future.

Such a well-rounded and holistic program, expertly delivered, is exactly what we require for Gen Z. Anything else is playing into the narrative of a financial program with marginal utility.

Here’s hoping our generation has the intestinal fortitude to stop with the sham initiatives and give Gen Z a worthy solution.