Traditional financial literacy efforts haven’t been a rousing success. Research from Harvard Business School shows that even Americans who are taught personal finance in school don’t seem to save more or manage credit better than anyone else.
That’s why many experts concerned about Americans’ money habits – including regulators such as the Consumer Financial Protection Bureau and financial think tanks such as the Center for Financial Services Innovation – are promoting the concept of financial health.
“Financial literacy is really what you know. Financial health is the outcome,” says Rachel Schneider, the center’s senior vice president. “You might know what to do, but the gap between knowing and behavior is huge.”
The concept of financial health also acknowledges the forces beyond our control. Just as physical health is a combination of behavior, genes and access to good medical care, financial health is a result of personal decisions and abilities, the economy and access to good, unbiased financial services and advice.
“There is an element of personal responsibility, but it’s more than that,” Schneider says.