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Slate Says “Financial Literacy Doesn’t Work,” I Say They’re Wrong

I can’t think of many initiatives more noncontroversial than teaching Americans to save more and spend wisely. Yet I’m constantly surprised by how often the concept is attacked.

It was almost exactly a year ago that defended financial literacy from a skeptical Harvard professor who claimed such classes in high school would make students from poorer families feel bad. argued that financial literacy is one way to get out of poverty, eliminate debt, and build wealth.

Now Slate magazine has written an article under the headline Stop Trying to Make Financial Literacy Happen. It calls the concept “a noble distraction from actual consumer protection.”

Not a clean Slate

There are several problems with Slate’s argument. First, it sets up a straw man to knock down:

The financial world is complicated? People don’t do the right things? Then educate them! Teach kids about budgets and living within their means, offer employees an investment information session — and voila! Twenty years later, credit card debt and the retirement savings crisis will be things of the past, and we’ll all be on the road to financial nirvana.

Since when does any class solve the social ills it addresses? Sex-ed classes haven’t eliminated teen pregnancy, and physical education hasn’t eliminated teen obesity. Does that mean we should stop trying?

Second, the article quotes studies with obvious bias.  It cites one from a journal called Management Science that begins this way: ” Policy makers have embraced financial education as a necessary antidote to the increasing complexity of consumers’ financial decisions over the last generation.”

I’m distrustful of researchers who approach financial literacy as a “policy” issue. I also dispute anyone who suggests it’s an “antidote” to anything. It’s a tool like any other.

Third, Slate mostly attacks one industry for using financial education as a cheap marketing tool. The writer cites various banks and other companies who paid hefty fines for bad practices. For instance:

BB&T Bank, the parent of brokerage Scott & Stringfellow, which came to a $350,000 settlement with the Financial Industry Regulatory Authority in 2012 after it was accused of marketing nontraditional exchange-traded funds to customers without properly educating the representatives selling them. That result? Customers who were seeking “capital preservation” ended up being peddled riskier investments than they wanted.

Slate’s gotchya moment: BB&T touts financial literacy on its website. However, BB&T also supports the Boys & Girls Club. Are those children similarly sullied because BB&T was fined?

Taking literacy literally

Financial education is a sensitive topic because money is both the problem and the solution. It quickly and easily devolves into a political topic. Slate is a left-of-center website, but there are conservatives who view financial education in schools as needless — parents should teach finances and schools should stick to the three Rs.

My hope for 2015 is that financial education becomes as ubiquitous as English classes — and just as controversial.

Howard Dvorkin is a CPA and chairman of, an educational resource for those who want to conquer all forms of debt in their lives.

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