why most financial education is not effective today

what The Inner Game of Tennis taught me about life, part 2. Financial disclaimer at the end of the article.

Table of Contents

• what the inner game of tennis taught me about fina …

• the similarities between physics and personal fina …

• learning about finances even more overwhelming if …

• discover what YOU want to learn

• project I’m working on in stealth mode 👀

what the inner game of tennis taught me about financial education in this country

I recently read The Inner Game of Tennis. Phenomenal book that helped me develop deeper insights into why I think most financial education in this country is not effective.

Because there is no right or wrong. Let me explain.

Here are a few opinionated statements I’ve come across when it comes to investing.

• Real estate is a bad investment.

• Stock market investing is too risky.

• All debt is bad.

• Always max out your 401K.

• You should definitely follow the 50/30/20 rule when it comes to saving and budgeting.

What I see are a lot of definitive statements, with no context.

Sure, real estate doesn’t make sense for everyone. Or buying stocks is risky, if you only buy/sell based on fads. But what works for you may not work for someone else. Each person has a different set of circumstances, whether it’s age, timelines, or personal risk tolerance.

So why is it so shocking that so many “one-size-fits-all” solutions exist for financial education, yet every 1 in 2 U.S. adults lack financial literacy?

There is no doubt “financial education” exists today. Here is a rough estimate of the number of financial education books, Youtube videos, and podcasts that exist.

• Books: ~thousands - 100s of thousands

• YouTube Videos: ~millions

• Podcasts: ~thousands

Additionally, more than two-thirds of all states are now requiring personal finance classes for high school graduation – up dramatically from 2022 when fewer than half the states had such mandates.

But let me share a hypothesis with you, based on 100s of conversations I’ve had with folks about money.

Formulas to grow wealth will only get you so far.

Don’t get me wrong, they can be a great stepping stone to cracking your financial health, especially for my fellow rule followers.

But here’s the biggest bone I have to pick with generalized financial advice: formulas prescribe a right or wrong value, rather than stand as a form of guidance.

Let me break it down, with an analogy to physics.

the similarities between physics and personal finance

Think about those physics tests you would take in high school, where you were told formulas like F = ma. If you were uncertain on a test, at least you had a few formulas you could plug and chug numbers into, and you get a solution. But you get the test back with a big, red C. The formulas failed you, because you didn’t actually understand when to use the formula. Similarly, it’s easy for us to give up at the first sign of failure, especially when it comes to solutions that may work for one person or not another person.

You may think, but physics is a hard truth! These are the laws that govern the universe. But rather than considering them as “fundamental truths,” physics laws are just well-tested and widely accepted descriptions of how the universe operates based on our current understanding, key word current. Even Einstein broke conventional thinking about gravity to create the law of general relativity.

Similarly, a lot of these financial formulas for building wealth are just well-tested heuristics. They have been evaluated to help people with their finances. For example, investing in index funds is a great way to grow wealth over time, because of the concept “dollar cost average.” But does that mean that every person who has built wealth has invested heavily into index funds? Not necessarily.

learning about finances even more overwhelming if there’s no one-size-fits-all solution

I get it, I just told you: don’t believe everything you hear on the Internet, and find what works for you. That sounds great in theory, but when you live in a time of information overload, how does one answer the ambiguous question: how do I build wealth in a way that works for me?

Now that we’ve shattered the glass house, let’s build it up again but with an open, nonjudgmental mind. I’m bringing back formulas, but with a different lens. Once again, let’s bring back physics.

Richard Feynman was a theoretical physicist who played a quintessential role in developing quantum mechanics theory. More than that, he was a brilliant teacher who made difficult topics digestible. How?

According to him, the best way to learn physics, or any subject, is to focus on understanding the fundamental basics and then build upon them by simplifying complex concepts into clear, accessible explanations, often using analogies, to truly grasp the core ideas; this approach is commonly known as the "Feynman Technique." 

There is no way you are learning about the law of general relativity without understanding Newtonian physics (e.g. gravity). Similarly, there are certain basic topics in financial education, like credit, debt, investing. Learning the fundamental building blocks with no opinions (i.e. first principles thinking) allows for a few things:

• Breaks down topics into small, digestible module

• Gives you guidance on where to begin learning, rather than throwing you off the deep end

• Allows you to experiment with new strategies after you develop a firm understanding of the fundamental principles

• Gives you the autonomy to determine what type of wealth building works for you, without feeling constrained to what wealth looks like to other people

Yes, banks, credit scores, and investing may make us feel a certain way. Anything in this world is subject to our opinion. However, develop your own opinion about it. Critically think. Learn the system as it exists today, with no judgment, and determine what works for you vs. not.

Congratulations, you’ve learned without determining right from wrong. Now, let the real fun begin.

discover what YOU want to learn

“Once you learn how to learn, you have only to discover what is worth learning.” — Gallwey, The Inner Game of Tennis

Yes, we can all go and sit down to “learn” financial education. Read some books, listen to podcasts. But you can’t learn to play tennis by just watching. Similarly, true financial literacy comes from actively applying your knowledge, making mistakes, and learning from them. We can’t just stay in theory world our whole lives.

By figuring out: maybe I have to save more today to provide for my dependents, but in a few years, I have more bandwidth to invest. Or maybe, I’m single with no loans and financial dependents, so I have higher risk capacity to start my own venture. You just graduated from college? Ok let’s talk credit cards and employee benefits and compensation. You want to start your company? Let’s talk basics of starting a company in this country.

I’m a strong believer that the best learners are autodidacts, aka self-learners. Learn about the stuff that matters to you, because quite frankly, only you know that. Not your friends, not your family, not the Internet. Maybe you don’t know what you want now. Amazing, you’re starting with a clean slate and you can just be observant and nonjudgmental towards what you want.

There is always going to be a wealth of knowledge disposable to you, especially in the information age we live in. It’s going to be overwhelming, and it’s even more crucial to understand the fundamentals that don’t change, and then find what works for you. Remember, our relationship with money is fundamentally emotional and unique to each person.

Let’s be honest, we only learn about things that we actually want to learn about or feel incentivized to learn about. Have an accountability buddy. Mood board your dream life. Gamify the learning. Exercise that child-like curiosity towards learning.

project I’m working on in stealth mode 👀 

There’s much more I have to say in making the act of learning fun but here’s what I’ll end with: I am on a mission to overhaul the financial education system as it exists today in the U.S. Here is my first MVP, and I’d love to gather a group of trusted testers as I continue developing. The site is password protected, so you can do one of the following:

• Please respond “MVP” to this email to access the site

• Email me at [email protected]

• DM me on instagram

• Pass it along to someone who would find this useful!

until the next 🐝  and with 💛 ,

Sneha

This newsletter article provides general information and educational resources on financial topics. It is not intended as financial advice, and should not be construed as such. The information presented here is for informational purposes only and does not consider your individual financial circumstances or objectives.

Before making any financial decisions, you should consult with a qualified financial professional who can assess your specific situation and provide personalized guidance.

The author of this newsletter article and its publisher are not liable for any losses or damages that may result from the use of or reliance on the information contained herein.