Why financial literacy efforts do not work well ?

pink pig figurine on white surface
Picture by Fabian Blank

In big picture, if you really look at it, the power/money structures do not want the general public to be good at finances. Look at our society- we are awkward, ashamed and it is a taboo to talk about money in our families.

Why? because we think money is secondary -the money can’t buy happiness crap.

But truth is, unconsciously we believe money is evil. We despise wealthy people as corrupt. We do not let ourselves be wealthy. So when our unconscious minds work against money, even though we want to do well, our minds won’t let us succeed, because we feel guilty.

There are many financial literacy curriculums, workshops and awareness programs running in Sri Lanka. They are run by corporates to make their staff do well, in apparel factories to help low wage earners to better manage their lives, by NGOs for disadvantages communities and in some schools as an extra curricular thing.

Middle class swear by their credit cards. Lower class pawn their gold and recycle ‘seettu’. Many are squeezed by micro credit legitimate sharks, pyramid scammers and “game poli mudalali.”

Financial literacy should help us take better decisions. But why it isn’t ?

  1. By definition literacy is knowledge. Not application. So having knowledge about finance and practicing good financial habits are worlds apart. Practice require patience and planning.
  2. These programs are mostly delivered to a person, not to the whole family. He gets knowledge and disappears in to the family and society. He has no leverage. He’s alone and fights the battle in his mind. He keeps financials as a secret. Most spouses do not know what is happening with their family finances.


Involve families.

Get the family members to talk about money. Plan together. Grow and sometimes crash together.

Our school education fragment the family, the society.

We play down real practitioners for illusion of certificate knowledge.

It’s time to get back to family, involve all of them, if you are interested in making people financially strong.

This is on each and everyone of us.

Compound interest is in your interest.

Compound Interest: The power that can change your life | by Chris Tsounis |  Medium

Here’s an example of the power of compound interest.
Let’s say you put a fixed deposit of Rs.100,000 in a bank account which gives you 7% annual interest.
You absolutely do nothing else. You let it be in the bank account to accumulate with the interest year after year. In 10 years, you’d have Rs.200,000. You doubled your money because you let the money accumulate with interest. You doubled your money with just the compound interest.
You did absolutely nothing, but to put that 100,000 at the start. But this “you did absolutely nothing” is misleading. Here you are doing a very hard thing. A challenge that most of the people in this planet is not capable to do. The challenge is to “NOT touch that saving” for a long period of time. Our immediate impulse when we have some savings is to spend it on something we desire. We think “what is the point of saving when we cannot enjoy the present moment”. Lot of people give in to that, upgrading life frequently at the expense of building a safety net.
I used to be one, and that was painful.

Let’s say you are a good saver. Not only you put Rs. 100,000, but you put 10,000 each month for 10 years at 7% annual interest. You let the interest accumulate monthly. You would have Rs. 1,931,814 at the end of 10 years.

Let’s say you are a super saver. Not only you put Rs. 100,000, but you put 20,000 each month for 10 years at 7% annual interest. Let the interest accumulate monthly. You would have Rs. 3,662,662 at the end of 10 years.

You can check out scenarios from this calculator

Micro finance should be regulated

A loan officer somewhere in India. There are good outcomes when done right, but things have turned bad. 

Micro finance is not glorious as majority of the reports out there proclaim. There are many findings to the contrary, including this article of FT. 

Micro finance has been converted from a small enterprise creation help for poor people to a monster greedy business machine for finance institutes to exploit poor people. 

According to the Lanka Microfinance Practitioners’ Association (LMFPA), data gathered from 37 MFIs for from 2017 to 2018 shows that there are over 2.8 million active borrowers, of whom over 2.4 million are women, who have taken loans amounting to Rs. 94 billion. 

The micro finance sales people are dishing out loans ( very small loan at bizarre high interest rates as much as 40%) to poor people for consumption purposes. Sales people know it. They don’t care because  their commission is at play. The recipient ( Most of the time a woman) is not finance literate at all, and all they care is getting that money to get out of the trouble they are in for the moment. 

It was found that women are compelled to borrow to finance health emergencies, funerals, coming-of-age ceremonies and weddings through microcredit facilities. “They give the loan for livelihood development, but we use the loan for other purposes. I showed tailoring and cattle rearing as reasons for getting the loan,” said a female from Batticaloa, while another from Monaragala said that she took the loan saying it was for cattle rearing. “I showed someone else’s cattle as my own since I don’t have my own. That is how people borrow. We show different means to borrow money,” she said

As the article mentions, there’s a direct link between women migrating to middle east countries as house maids to pay back the very small loans they received as micro finance, which have become un payable.  

The micro finance space is not regulated. This is sick.