Changing Behavior: The Financial Education Challenge
By George Araneo
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Curt Lansbery, CEO of North American Tool, was frustrated that his employees weren’t maxing out their 401(k) investments. Participation was low, even though the company matched a portion of the employees contribution.
So, one year, at the annual 401(k) enrollment meeting, he brought in a big bag, unzipped it, and upended it over a table. Cash started pouring out. Conversation came to a halt.
Lansbury had tabulated exactly how much money his employees had failed to claim the year prior: $9,832. “This is your money. It should be in your pocket. Next year do you want it on the table or in your pocket?” Enrollments jumped immediately.
Lansbury did something that is very difficult: he changed peoples’ behavior. If replacing behavior that does not serve us with behavior that does were easy, the multi billion-dollar bad habit changing industry would not exist.
Americans are particularly plagued with self-defeating behavior when it comes to their money. Fifty-six percent of adult Americans admit that they do not have a budget. One-third, or more than 77 million Americans do not pay all of their bills on time, and 39% carry credit card debt over from month to month.
Shocking statistics given the amount of sound money management information available, and the growing financial education community committed to help us put this information to work. Yet, even with all these resources the statistics show that the need to change our ways has never been greater.
The challenge for the financial education community is to not only motivate individuals to access these resources, but to then follow through with the action required to create real change in their lives. We so often struggle to change our ways, even when we know doing so will significantly transform our experience.
Why is it so hard to change our behavior; to change our lives for the better? Why this frustrating gap between the abundance of financial education resources available and our current financial state?
The answer is found in an inescapable fact about human behavior. Simply, we have to really, really, really want to change before long-standing habits can be transformed. It takes deep emotion to bring knowledge to a boil. Real change comes from real feelings.
If you went to your doctor and were told that on your present path you are looking at a significantly reduced life-span, chances are you’d discover the motivation to pursue better health habits. To transform our financial condition often requires a similar emotional wake-up call. Think about it. Have you ever made a significant change in your life that did not spring from strong feelings?
Given this, perhaps the best place to start our financial transformation is to understand exactly what is at stake. It’s fair to say that every moment of your life is impacted by the accumulated wisdom you have brought to the management of your personal finances. Read that sentence again; it’s true.
Numerous studies point to a clear connection between our financial health and our physical, mental, and emotional health. Financial issues are the clearest predictor of divorce and the most consistent catalyst for stress in our society. Almost every choice we make is influenced by our financial condition.
So, the more compelling context to present financial education is that gaining control of your finances can lead to better health, better relationships, more choices, more freedom, and a greater sense of personal power. This is about more than your bank account, this is about your life. We need to feel this.
Now, to create these life-changing benefits does require acting on specific information. A basic understanding of debt, credit, savings and investing are essential. Presenting this information in a way that changes behavior is the challenge.
Brian Page, high school finance and economics teacher in Reading, Ohio, took an unconventional approach to impart money management lessons to his class. He noticed the high number of check-cashing services and pawn chops clustered around his county courthouse.
When he inquired as to the reason, a court clerk tipped him off: Every day people leave here with checks they’ve received in legal settlements. They often stop to cash their checks right away, paying a big fee for the privilege, and then visit the pawn shops with the money.
This gave Page an idea for a field trip, “I can talk to my students about these places and show them the math on the fees, but I wanted them to feel it.”
After a day spent visiting LoanMax, CheckSmart, CashAmerica, and Rent-A-Center, the students had been duly impacted. Said one 18 year old, “It’s just crazy how expensive all of this is and how they con you into stuff”
While current financial education material does a great job distributing information it is less effective in distributing desire, motivation, and belief. Carl Lansbury and Brian Page solved this problem with out-of-the-box ideas that grabbed attention, had emotional impact, and changed behavior.
A potent tool to achieve similar results available to all financial educators is the power of story. Did the stories of Lansbury and Page capture your attention? Have you ever become deeply engaged in an issue after first hearing a story that grabbed you emotionally? Ever experience a film that altered your perception, deepened your understanding, changed your life?
Research has shown that when information is given to us in story form, we’ll remember it more readily and accurately. Our brains are hardwired to connect to our fellow humans through story. The greater the emotional impact of the story the more deeply it will be stored in our long-term memory.
Compelling stories about the power of financial education are plentiful. Personal stories of success can be found in all communities, at all ages and all income levels. Even where the challenges seem daunting you will find the outliers who have transcended circumstance and succeeded.
Collect these stories, find a platform to amplify them, and change will happen, change always happens. Story is the most powerful catalyst for change in our society. It makes change believable.
By presenting financial education in the context of its larger life-changing benefits you create a deeper desire for it. Through the power of story you will wake your audience up to new possibilities within themselves to change their behavior and their lives.
If you can convey an idea that resonates emotionally you can change the world!
So, one year, at the annual 401(k) enrollment meeting, he brought in a big bag, unzipped it, and upended it over a table. Cash started pouring out. Conversation came to a halt.
Lansbury had tabulated exactly how much money his employees had failed to claim the year prior: $9,832. “This is your money. It should be in your pocket. Next year do you want it on the table or in your pocket?” Enrollments jumped immediately.
Lansbury did something that is very difficult: he changed peoples’ behavior. If replacing behavior that does not serve us with behavior that does were easy, the multi billion-dollar bad habit changing industry would not exist.
Americans are particularly plagued with self-defeating behavior when it comes to their money. Fifty-six percent of adult Americans admit that they do not have a budget. One-third, or more than 77 million Americans do not pay all of their bills on time, and 39% carry credit card debt over from month to month.
Shocking statistics given the amount of sound money management information available, and the growing financial education community committed to help us put this information to work. Yet, even with all these resources the statistics show that the need to change our ways has never been greater.
The challenge for the financial education community is to not only motivate individuals to access these resources, but to then follow through with the action required to create real change in their lives. We so often struggle to change our ways, even when we know doing so will significantly transform our experience.
Why is it so hard to change our behavior; to change our lives for the better? Why this frustrating gap between the abundance of financial education resources available and our current financial state?
The answer is found in an inescapable fact about human behavior. Simply, we have to really, really, really want to change before long-standing habits can be transformed. It takes deep emotion to bring knowledge to a boil. Real change comes from real feelings.
If you went to your doctor and were told that on your present path you are looking at a significantly reduced life-span, chances are you’d discover the motivation to pursue better health habits. To transform our financial condition often requires a similar emotional wake-up call. Think about it. Have you ever made a significant change in your life that did not spring from strong feelings?
Given this, perhaps the best place to start our financial transformation is to understand exactly what is at stake. It’s fair to say that every moment of your life is impacted by the accumulated wisdom you have brought to the management of your personal finances. Read that sentence again; it’s true.
Numerous studies point to a clear connection between our financial health and our physical, mental, and emotional health. Financial issues are the clearest predictor of divorce and the most consistent catalyst for stress in our society. Almost every choice we make is influenced by our financial condition.
So, the more compelling context to present financial education is that gaining control of your finances can lead to better health, better relationships, more choices, more freedom, and a greater sense of personal power. This is about more than your bank account, this is about your life. We need to feel this.
Now, to create these life-changing benefits does require acting on specific information. A basic understanding of debt, credit, savings and investing are essential. Presenting this information in a way that changes behavior is the challenge.
Brian Page, high school finance and economics teacher in Reading, Ohio, took an unconventional approach to impart money management lessons to his class. He noticed the high number of check-cashing services and pawn chops clustered around his county courthouse.
When he inquired as to the reason, a court clerk tipped him off: Every day people leave here with checks they’ve received in legal settlements. They often stop to cash their checks right away, paying a big fee for the privilege, and then visit the pawn shops with the money.
This gave Page an idea for a field trip, “I can talk to my students about these places and show them the math on the fees, but I wanted them to feel it.”
After a day spent visiting LoanMax, CheckSmart, CashAmerica, and Rent-A-Center, the students had been duly impacted. Said one 18 year old, “It’s just crazy how expensive all of this is and how they con you into stuff”
While current financial education material does a great job distributing information it is less effective in distributing desire, motivation, and belief. Carl Lansbury and Brian Page solved this problem with out-of-the-box ideas that grabbed attention, had emotional impact, and changed behavior.
A potent tool to achieve similar results available to all financial educators is the power of story. Did the stories of Lansbury and Page capture your attention? Have you ever become deeply engaged in an issue after first hearing a story that grabbed you emotionally? Ever experience a film that altered your perception, deepened your understanding, changed your life?
Research has shown that when information is given to us in story form, we’ll remember it more readily and accurately. Our brains are hardwired to connect to our fellow humans through story. The greater the emotional impact of the story the more deeply it will be stored in our long-term memory.
Compelling stories about the power of financial education are plentiful. Personal stories of success can be found in all communities, at all ages and all income levels. Even where the challenges seem daunting you will find the outliers who have transcended circumstance and succeeded.
Collect these stories, find a platform to amplify them, and change will happen, change always happens. Story is the most powerful catalyst for change in our society. It makes change believable.
By presenting financial education in the context of its larger life-changing benefits you create a deeper desire for it. Through the power of story you will wake your audience up to new possibilities within themselves to change their behavior and their lives.
If you can convey an idea that resonates emotionally you can change the world!
