April is Financial Literacy Month (But Financial Literacy Won’t Fix Everything)

April is “Financial Literacy Month” and Billfold pal Helaine Olen talked to CBS MoneyWatch’s Jill Schlesinger about, well, how financial literacy is good in theory but ineffective in practice (we also talked about this last month). Federal Reserve Chairman Ben Bernanke has said that one of the lessons of the financial crisis is that we should have all Americans gain a “basic knowledge of finance and economics.” But as Helaine tells MoneyWatch:

“The best chance of avoiding the financial crisis would have been legislative reform that would have made a lot of the actions that caused the crash illegal,” she said. “The idea that financial literacy could have prevented the advent of [collateralized debt obligations], excess leverage and shady lending practices is absurd.”

Which, yes! The other week, Logan and I met a friend for a drink at a bar, and the topic of financial literacy came up (because that’s how we roll). We put it this way: Logan and I have been writing and talking about money for years. We both have a solid understanding of what is happening with the economy because we read about it every day. We both understand how money management works. We both have an understanding of how financial products like credit cards work. And yet.

You see where I’m going with this. Financial literacy doesn’t prevent people from making poor choices. This doesn’t mean, of course, that we shouldn’t make an attempt to do it — knowing is half the battle, as they say. It’s just not the solution.

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