What’s the difference between financial education and flossing? (Or how we think about behavior change)
“Financial education is about as alluring as flossing your teeth.”
That’s how I was introduced at a panel of financial inclusion startups at SOCAP14 earlier this week in San Francisco. Kat Taylor, the panel moderator and CEO of the very awesome Beneficial State Bank, was clearly trying to spice things up by starting off with that accusation. But I didn’t disagree.
However, I responded, there is one huge difference between financial education and flossing. Flossing works.
It’s no joke. Almost all the research proves that standard financial education does not improve financial health. Sit someone down in a class for 6 hours and teach them about budgeting, saving, mortgages, etc. They might learn a thing or two, but the likelihood that they will change any of their financial behaviors is virtually zero.
PayPerks buys into a totally different model of financial education, one called financial capability. Financial capability is focused on changing financial behaviors for the better, not just increasing basic knowledge. According to our friends at CFSI, for a financial capability product or tool to actually change behavior, it needs to have these four traits:
The PayPerks platform has all four.
We teach our users how to maximize their prepaid cards at timely moments, like when they get a brand new card in the mail. We’ve designed fun, illustrated, bilingual, relevant content that delivers actionable ideas that our users can to put work immediately with the prepaid card in their hands. And our ongoing monthly sweepstakes keep users coming back month after month to win prizes and increase their financial capability.
So yes, traditional financial education is about as exciting as your basic oral hygiene without any of the benefits. But financial capability, especially when it’s done PayPerks-style, is like an electronic toothbrush that plays your favorite song, leaving you with perfect teeth and a smile. :-)
Rob Levy (@robdlevy) is PayPerks Director of Partner Development and Consumer Impact.