What is financial literacy and why is it important? A discussion between Steve Lear and Nichole Tessier.

Steve Lear |

In honor of April being Financial Literacy Month (also named National Financial Capability Month), Founding Partner and Financial Planner Steve Lear recently sat down with Executive Administrative Assistant, Nichole Tessier, for a discussion on financial literacy and why it is important. 

Q: Steve, how would you define financial literacy?

Financial literacy is understanding the basic terms of finance, but also understanding the related decisions and consequences. Becoming financially literate requires an individual to determine their goals, values, and capacity. When you create clarity for those three items, you become not only self-aware, but you are on the road to self-actualization. Getting more people self-aware of who they are, what they want to do, and what their capability is, can help get them in a position to have a meaningful life. This is what financial literacy is all about.

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Growing up you are required to take health classes that teach you the basics about your body, so why aren’t there required classes about the basics of personal finance? Almost every decision in life requires money in some way or another. Are you trying to find a spouse by dating? That requires money! Financial literacy is a core element.

Q: If financial literacy is taught in schools, what would the class include?

Some examples of what I think should be taught in schools include understanding managed money accounts, such as mutual funds and exchange traded funds (ETFs), risk management and creating your own risk nets, car and homeowners insurance, what is a deductible, etc. There is a whole vocabulary, and the goal is to teach it so that it becomes a common language for everyone.

Q: Why is financial literacy important on a societal scale?

The purpose of community, or society, in my opinion, is to create a platform where individuals within that community can live a life full of meaning. Being financially literate can lead you to self-actualization, where you understand the consequences of your financial behaviors and can create a path to do all the things you want to do in life. Finances should be like understanding the language in the country where you live, or knowing how to add and subtract. Finance is one of the best subject matters to help someone become a better decision maker. This can lead to a better society if people have that knowledge and that wisdom.

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Q: How can financial planners help create financial literacy?

I think the financial planning industry needs to elevate itself to a higher level of service to the client. We need to truly help the client understand the consequences of different behaviors and help them make a decision, not overwhelm them with jargon. A lot of the financial industry is selling something, but comprehensive financial planners are different. We are more generalists, putting all of the pieces and players together.

I often hear, “Isn’t it a financial planner’s job to help someone become financially literate?” No, the job of the financial planner is to guide people to make wise decisions regarding their money, and put these decisions into context of other things in their lives. But I believe that financial planners, as a whole, have a societal responsibility to help spread their knowledge beyond their own clients by supporting wider financial literacy efforts.

Q: What is the ultimate goal of teaching someone to become financially literate?

When someone is financially literate, they will make wiser decisions. There is so much ego, and so much taboo, in this subject matter, we need to level the field. We need to get people to understand the behaviors that will help get them on a path to financial security.

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Q: How did you get interested in financial literacy?

I wanted to give back in some way to the financial world. Around 2008 I connected with Bob Kaitz (President & CEO of BestPrep). I helped create their Financial Matters program, which equips Minnesota students with the tools necessary to develop sound money management skills. Then, when I started to have grandchildren, a lightbulb went off that there will be a whole other generation that I want to teach to be financially literate.

Today, I am part of the Financial Literacy Coalition of Minnesota (FLCM). This Coalition, in collaboration with the Minnesota Council of Economic Education (MCEE) has worked with legislatures to write a bill requiring high school students to take a semester credit class in personal finance. This course can be taught by Agricultural Education, Business, Family and Consumer Science, Math, or Social Studies teachers and would replace an elective credit or an Algebra II math credit.

Q: Tell us more about your role with the Financial Literacy Coalition of Minnesota

Julie Bunn, Executive Director of the Minnesota Council on Economic Education (MCEE), decided years ago that she wanted to be a leader of a movement to get our state legislators to require a semester long course on personal finance in order to graduate from high school. She couldn’t do it alone, so Jason Kley, Julie Bunn, and I started the Financial Literacy Coalition of Minnesota (FLCM). And I am very proud to be part of this Coalition. I am meeting regularly with teachers in the area for focus groups. I want to find out what they think is necessary to make this work. I believe that we can be successful by going straight to the people who will be teaching these courses if the bill passes, instead of starting from the top down.

Q: If someone wants to help make Financial Literacy mandatory in Minnesota schools, what can they do?

First I would suggest someone look at our Financial Education Policy Brief to learn more about the Financial Literacy Coalition of Minnesota. Next, I’m asking everyone to join our group of advocates (currently we have around 250 advocates). These are people who will build relationships with their legislators to get them to vote yes on bills regarding personal finances. By completing this survey, the Coalition, through the Minnesota Council on Economic Education (MCEE), will keep you updated on the bill’s progress and send you alerts to contact your legislators when the bill is in committee, or on the floor for a vote. All information you provide will be confidential and used solely for reaching out to you regarding advocacy for the Coalition/MCEE-supported bills. 

Q: Do you have any final thoughts about financial literacy or FLCM?

As Margaret Mead said, “Never doubt that a small group of thoughtful, committed citizens can change the world; indeed, it's the only thing that ever has.” The Financial Literacy Coalition of Minnesota is a small group of dedicated individuals, most in the financial planning community that created this platform. What I’m hoping occurs is that the financial planning industry will invest in this progress, with their time and money. It is not THE answer, but it is one of the answers.

To learn more about the Coalition and to sign up to become an advocate for requiring a personal finance course in order to graduate from high school, please visit their survey here: https://qfreeaccountssjc1.az1.qualtrics.com/jfe/form/SV_b2zQHYWTGcZDk7s

Steve and the FLCM were also recently interviewed by two local media outlets:



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