Posted by: Howard Dvorkin, CPA
Date of post: April 24, 2017

It's just another manufactured holiday. It doesn't matter. Right?

Financial Literacy Month ends Sunday. You’d think a CPA and financial counselor like myself would have thoroughly enjoyed these past few weeks. I did not.

Don’t get me wrong, I didn’t hate this month, either. I simply recognize the limitations of “awareness” — especially when it comes to personal finance. Let’s face it, many Americans are aware that they’re burdened with hefty credit card balances, auto loans, and student loans.

Many recognize this even as they continue to run up their bills. They do it anyway. Others want to do better, but they’ve suffered from a layoff, a divorce, or an illness; and both they and their finances have yet to recover.

“Awareness” doesn’t always lead to “action” previously reported that one quarter of Americans report being financially stressed all the time. So how do they respond to that stress? About half “tightened their spending,” but the youngest adults dealt with it by “going shopping;” just about the worst thing you could do.

That’s really the key, and something I’ve been preaching for years: Financial awareness is about much more than money…

For too long, financial educators have been preaching the math of saving more and spending less. I’ve done it myself: Create a budget, track your expenses, figure out your interest rates over time. However, I’ve learned over the past 20 years that really reaching people and changing their financial lives is about psychology as much as cash.

If we want Americans to convert awareness into activity, we need to think about how they think. I believe financial counselors can learn something from addiction counselors.

The similarities of spending and drinking

Perhaps not so coincidentally, April is also Alcohol Awareness Month. Founded by the National Council on Alcoholism and Drug Dependence, its stated goal is to reduce the stigma so often associated with alcoholism.” Once that happens, it’s easier to help people cover from this deadly disease.

I’m certainly not comparing a fatal addiction to credit card and student loan debt. That would be as silly as it would be insensitive — although I have written how “financial anxiety” has been shown to shorten life spans.

However, I believe we can draw comparisons to the stigma between these problems. Addiction counselors are aware that many Americans suffering from alcoholism are simply too embarrassed to seek help, even when they acknowledge they have a problem they can’t cope with on their own.

I can’t tell you how many Americans I’ve personally counseled about their debts who are embarrassed to speak with me at first. I have to reassure them that I’m not judging them and I tell them they shouldn’t feel bad because they’re not alone. This country now has close to $1 trillion in total credit card debt and is well past that number in student loan debt.

Once we hurdle that psychological barrier, we work on ways to conquer the actual debt. We usually succeed.

Financial Literacy Month must focus on this psychology if we’re truly going to reach the Americans who need to hear from us the most. We need to separate “ashamed” from “aware.” Then we can move onto “Aha!” — and really start fixing this national problem.