I began my career as a “homemaking teacher” and taught students in a rural school how to use their talents to both make and use money to build their future. Two years later I became a Family Economics Specialist with Texas A&M Agrilife Extension and created puzzles, lesson guides, and basic facts sheets to help families from the lowest income levels to the highest learn to plan for reaching their goals using a calendar and other tools to budget and plan cash flow.
I began my doctoral studies with financial management courses from Purdue in coordination with adult education, human resource management, and consumer marketing research courses at Texas A&M University. My dissertation addressed financial competencies needed to be financially successful. As I reviewed literature in financial management, I saw that more education, more income, fewer children, and starting early in learning to budget, save, and invest were key factors. I kept asking myself why some people with all of these advantages fail, while some people without these advantages succeed financially. Using the family systems theory, I decided to explore what happens in the “through put” process that causes like inputs to create different outputs.
From the human resources classes, I learned about behavioral anchored rating scales that are used to evaluate employees’ capability to perform required job competencies. Using that model, I asked 27 financial management experts from a broad scope of financial fields to complete a three stage Delphi study through which they identified financial management competencies adults need for successful financial management, and how they would describe performance of those competencies at ideal, adequate and inadequate levels.
Key findings: It’s challenging for people to define adequate and easy to define ideal and inadequate competency performance. Thus, people are stressed trying to achieve ideal performance of all skills when adequate is a great need for many people.
Of the 18 competencies identified, number one was the ability to set goals with the ability to determine how each decision would take them toward or away from their goals. Starting to make changes that are goal focused (pay down debt for example) is more likely to lead to success than having more money.
What surprised me most is that being able to reduce one’s tax liabilities as they planned savings and investments ranked #14 in importance. I asked why, since this is a primary focus of a lot of financial planning. I was told people need to look at their goals first. Will a tax reducing option lead to their goal, such as ability to purchase a home, or will it make money inaccessible or available at high costs when needed for their goals?
That study was in 1985, but I truly believe that when I voluntarily teach families facing financial challenges or youth starting their independent financial management roles, these are key factors to guide my instruction.
~ Lynn White