It Takes a Village to Raise a Child to be FI

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A famous African proverb goes, “It takes a village to raise a child,” and the same approach must be used when it comes to raising awareness about personal financial matters because this topic is pertinent to every single individual on the planet. 

A majority of chronic financial problems, such as the inability to get rid of debt or the failure to move beyond living paycheck to paycheck, are perpetuated by a lack of awareness about possible solutions. 

Without detailed knowledge about different saving, investing, and safe borrowing options, consumers will struggle to make informed financial decisions. This is why a high level of financial literacy is vital to one’s success.

We live in a complex world that is continually changing, and this reflects in the financial sector too. Every bank offers dozens of financial products and is continuously rolling out new ones, each delivering different benefits and risks to consumers. 

For instance, cash isn’t the only medium of trade anymore – there are now alternatives in the form of plastic money, and using these options isn’t as simple as choosing to swipe the cards.

Instead, consumers have to be aware of the resulting debt, if any, interest fees, late payment charges, minimum payment options, repayment schedule, impact on the credit score, and tons of other information mentioned in the fine print. 

The same goes for a seemingly regular savings account, where consumers are faced with a barrage of information about the duration of the deposit, the interest rate, the method used to calculate it, the market-wide inflation rate, early withdrawal penalties, and so on.

Without proper knowledge of these financial concepts and how they are applied in the real world, consumers will be unable to leverage the benefits of various financial instruments that can help them manage their money better and plan for emergencies.

Considering how vital financial literacy is, one may wonder who is responsible for imparting it. Who should instill within consumers the knowledge and skills required to make optimal financial decisions? At a macro level, does the onus fall upon the public sector or the private sector? Or is it something parents ought to teach children from a young age?

As the famous African proverb goes, “It takes a village to raise a child.”

However, shocking statistics from the Financial Industry Regulatory Authority reveal that as many as 63% of Americans are financially illiterate. To determine who should fill this void, let’s look at the different stakeholders in the financial literacy equation.

It Takes a Village to Raise a Child 

Just as the African proverb “It takes a village to raise a child” states that an entire community of people must interact with children for those children to experience and grow in a safe and healthy environment. Let’s review the Financial, Public, Education, and Parental sectors to see how they impact our ability to raise a financially literate child.

The Financial Sector 

It is not enough for public and private sector organizations to simply provide useful financial products to consumers and expect them to make the best choices. This is because many financial instruments can lead to counterproductive results if misused. Credit cards, for instance, have many merits but, when used irresponsibly, can deprive consumers of financial independence. The same goes for student loans.

To counter this, financial institutions are legally required to disclose all risks and fees that come with the use of each financial service, but the burden to understand the true nature of the agreement usually falls on the consumer. This is all well and good if consumers already have sufficient financial knowledge – if.

Consider the fact that credit cards are thrust upon teenagers as soon as they turn 18. Even though they are legally adults, this subset of consumers is often unaware of how to use credit cards responsibly because they lack practical, and often theoretical, knowledge of technical terms such as interest rates, repayment terms, account statement dates, billing cycle, credit scores, etc. If teenagers don’t know how to use credit cards correctly, we can’t expect them not to make mistakes and gather large amounts of high-interest debt over time.

Can financial institutions deliver this type of education to every single consumer to ensure they are informed? The cost, in terms of money and time, of running this kind of literacy campaign, would make it unsustainable for these organizations.

It takes a village to raise a child, and the financial sector needs to play its part.

The Public Sector

Governments can only make this level of investment in social welfare, and that’s why many governments and cross-national unions have been promoting financial education for decades. The OECD and World Bank are two notable global organizations that support the agenda of financial literacy all over the world.

In America, The Financial Literacy and Education Commission was set up several years ago to “develop a national financial education website ( and a national strategy on financial education” (Source: US Department of The Treasury). The commission also runs a helpline, publicizes federal financial aid programs, helps people improve financial preparedness for emergencies, and shares information about youth saving programs, among a host of other services.

It takes a village to raise a child, and the public sector needs to play its part.

The Education Sector

Granted, the government plays a vital role in educating consumers of all ages, but these efforts can be synthesized if the education sector gets involved.

The National Financial Educators Council conducted a nationwide survey in 2017, asking, “What high school-level course would benefit your life the most?” An overwhelming majority answered in favor of money management courses, and that does not come as a surprise because when it comes to planning for the future, sooner is better.

The reality is, financial education is not mandatory at the high school level in every state, as it should be, considering the infinite value it delivers. Only five states require graduates to take a specialized, half-year course on personal finance, and they are Alabama, Missouri, Tennessee, Utah, and Virginia (Source: Champlain College’s Center for Financial Literacy).

The government can step in to pass legislation that ensures every student learns the basics of personal finance at high school, so they can make sound financial decisions as soon as they enter college or the workforce. However, there is some debate as to whether these courses are effective in paving the path to financial freedom, and that is one of the reasons such laws have not been unanimously adopted.

It takes a village to raise a child, and the education sector needs to play its part.

Informal Education by Parents

Luckily, there is one more way to fill the gap in financial awareness. Parents can adequately compensate for the lack of financial literacy efforts by teaching children about budgeting, retirement planning, saving methods, investment plans, emergency funds, education funds, debt repayment, and a host of other financial topics that apply to each household.

By simply involving kids in discussions about these topics and gradually making them participate in household budgeting activities, parents can lay the foundations of responsible financial behavior within children. This will help prepare them for a future full of complex financial decisions and develop a sense of confidence, gratitude, spending discipline, and purpose in life as they set their own financial goals.

Of course, this is only possible if parents already have a good understanding of essential financial terms and practically apply them. If that is not the case, youth financial literacy simply cannot be taught at home, and it is up to the other stakeholders to deal with the vacuum.

It takes a village to raise a child, and the parental sector needs to play its part.

Final Thoughts on It Takes a Village to Raise a Child

In conclusion, the best financial literacy strategy is one that requires everyone (financial, public, educational, and parental sectors) to work together to reach the goal of universal financial awareness. After all, it takes a village to raise a child.