April marks Financial Literacy month. That means many financial firms will be highlighting their works in educating consumers about investing, saving, and spending. That’s a good thing. Unfortunately, too often that also means they’ll be doubling down on approaches to financial education that we know have not worked. And that can not only fail to help, it can – in fact – end up hurting.
The years since the 2008 financial crisis have seen a great new focus on financial education. There are more than fifty nationwide financial literacy initiatives underway led by companies, government agencies and non-profit organizations. Thousands of grassroots programs and products bring education and training into schools. Practically every major financial institution has at least a financial education website, if not a significant initiative, on this topic.
Yet, according to FINRA’s National Financial Capability Study, between 2009 and 2012, the percentage of Americans able to answer correctly basic questions of financial literacy actually fell.
A big part of the reason for that is that too much of financial education hits people over the head with charts, graphs, and formulas. Yet, what educators and behavioral scientists have learned is that most people learn through stories rather than statistics.
At Aspiration, education is a hallmark of our vision for building an investment firm for today’s middle class. However, instead of financial education narrated in jargon and technical language that expects customers to adapt to insiders’ lingo, we believe it is our responsibility to develop education that focuses on the important concepts that matter more than clunky terminology.
For instance, It's a Volatile Life is an animated “choose your own adventure” game which addresses the issue of volatility by focusing on life’s ups and downs - the real life matters of losing a job, facing a health crisis, planning for college, or even a possible zombie apocalypse (you never know).
Our animated videos bring a touch of humor to serious subjects: the mismatch of investment opportunities between everyday Americans and the elite investors favored by Wall Street, the importance of steady returns instead of the stock market’s roller coaster, and the role alternative investment styles can play in helping you reach your investment goals.
Aspiration's new approach is built for its customers, not for calculus professors. All your financial partners should explain the important concepts of finance, investing and savings in human, understandable terms. At Aspiration, that is our commitment.