Financial Literacy Is Like Green Eggs and Ham

The aim of education should be to teach us rather how to think than what to think – rather to improve our minds, so as to enable us to think for ourselves, than to load the memory with thoughts of other men.

~ Bill Beattie

Update #1: This post was included in the Carnival of Money Stories 2: Disaster Issue posted at True Adventures in Money Hacking. Thank you!

Update #2: Thanks to the Mighty Bargain Hunter for choosing this post for inclusion in the Money Hacks Carnival: Middle Name Pride Day Edition.

It’s easy to think that we can’t control a great deal in terms of our financial position. After all, there’s only so much money coming in – and no amount of planning, coupon cutting or budgeting is going to get blood from a stone. A few more loonies spent here or a few less there isn’t going to make a fundamental change in our financial health.

To some extent, that’s true. I admit that I used to think a bit like that myself. After all, if there’s no way to really improve our situation, why spend any of our precious energy trying? Haven’t we got enough to deal with already?

I don’t know what to tell you, except that personal financial improvements are sort of like Green Eggs and Ham. To quote Sam I Am,

“You do not like them. So you say. Try them! Try them! And you may. Try them and you may, I say.”

For a lot of us, financial education and planning is sort of like icky vegetables and daily exercise. We know we should do it. We know it’s healthy for us and for our families. But we’re tired, time-crunched, and tied up in old habits. Besides, is one more greasy burger and fries going to kill us? Will taking a walk or hitting the bike really do all that much to help? Once I create a budget, I’ll discover what I already know: I need more money.

Change Compounds Too

I’ve struggled with healthy eating, getting enough exercise, and keeping on top of our finances. But I made some changes in each a little at a time. Years later, those changes have compounded like interest on savings. If I hadn’t implemented them, I’d still be compounding debt – so to speak.

I went from skipping breakfast and eating junk food for lunch to eating 3 more or less balanced meals a day. I went from hating vegetables to craving them. I used to exercise about never and now I try to do something at least 5 days a week. I went from having no clue what a stock or RRSP was to understanding risk-reward, moving averages, PE ratios, fibonacci retracements, and much more.

Benefits of Financial Literacy

I’m going to let Task Force on Financial Literacy spell it out for us. They say it can help us with the following:

• cope with major financial decisions related to life events like post-secondary education, home ownership, marriage, divorce, aging parents, incapacity, longevity, death, wills
• make sense of the financial products we already own or are considering so we can decide if they’re appropriate for our goals or situation
• adopt smart habits and attitudes like asking questions and doing comparison shopping before making decisions about products like credit cards, mortgages, insurance and investments
• recognize and be less susceptible to fraud, unregulated financial products, and unethical practices that can lead to financial loss
• be aware of our own behaviour as investors including the principles of risk and reward
• understand interest rates and the fees associated with saving investment and debt
• understand the tax system better to take advantage of RRSPs, TFSAs and RESPs

In addition, they cite the benefits of a financially literate population to the overall economy:

• promoting self-sufficiency and financial independence
• reducing the pressure on social programs
• enhancing economic stability
• strengthening competitiveness
• contributing to stronger public markets

Education + Action = Results

I made a lot of changes gradually through education. If I didn’t know what I was doing (that happened a lot), I read books and found the information I needed. I went from never having held a baby to having 3 of my own – two at a time the first time around! Although I had an extensive background in education and psychology when I had my children, I still read tons of books to fill in the gaps. Oh, and don’t forget that there are some things that experience teaches way better than books – or blogs.

I’m not going to tell you that I’ve mastered all of these things. I haven’t. Some days I don’t get on the bike. Some days I still eat junk for lunch. Sometimes I get lazy about financial tracking. Some days I fall out of the Mother of the Year standings. But I’m still better at all of that stuff than I used to be and a few bad days don’t mean I won’t continue to get even better. You will too. Try it. Green eggs and ham really are yummy.

Have you ever reluctantly made changes that surprised you with their positive effects?