Unless you were born into riches, you’ve probably dealt with money troubles. Financial problems can be a struggle, and “financial literacy” is the go-to solution to building good money habits. Create a budget, learn some basic rules, and poof! Our money woes are cured. That’s not all it takes to improve your finances, though. Not by a long shot.


Financial literacy is, in a nutshell, understanding how money works. It’s very important, and it’s not difficult to learn. In fact, there are a handful of free resources to help you learn all about money. Those lessons can be helpful tools. However, if it were as easy as learning some basic math and rules, we’d all be awesome at money. Less of us would struggle with debt, live paycheck-to-paycheck, or overspend on stuff we don’t need.


Many people assume financial literacy is the key to fixing these problems, though. For example, we recently wrote about the first thing you should do to get your money in order (figure out why you want to get it in order). Many of you had other ideas, like:

Figure out how to budget

Pay off your debt

Record all of your transactions

Learn about compound interest

These are the basics, and it’s absolutely important to have this knowledge in your arsenal. But these answers miss the point. Personal finance goes beyond this knowledge: it’s personal. And it’s important to understand why money is such a challenge for so many people. That way, we can tackle that challenge at full force and learn how to use those tools.

Money Is More About Behavior Than Basic Rules

Whether it’s basic budgeting, negotiating salaries or lower prices, or investing for the future, people often ask “why don’t they teach this in schools?” Well, they do teach this in schools. The problem is, teaching it is not that simple.


Years ago, I interviewed Laura Levine, President of Jump$tart Coalition, an organization dedicated to bringing financial literacy to classrooms. She told me one of the biggest challenges they face is deciding exactly who should teach financial literacy lessons:

There isn’t a way to identify where all the finance teachers are. If you teach algebra, there’s very little debate that’s in the Math Department. But personal finance might be social studies or consumer science or business. There are a lot more variables...Personal finance and financial education are very complex and very nuanced. We want to make sure we’re really assessing and seeing what makes it effective. But we’re not waiting for a perfect solution to get started.


In other words, money isn’t just math. It’s also behavior. Here are a few behavior-related lessons that helped me get my finances in order more than any rules:

Some financial solutions are indeed pretty straightforward, but in general, if you assume money is as easy as setting up a budget, you’ll probably be really frustrated and disappointed later, when you have trouble sticking to that easy budget. It’s not hopeless, though. When you acknowledge just how much money management money depends on habits, willpower, and other behaviors, you can better focus your energy and effort.


The Rules Don’t Always Work

There’s another reason basic financial rules (like “spend less than you earn”) won’t solve everything: they don’t always work.


For example, when I was in student loan debt, I bucked the “save 3-6 months of expenses for an emergency” rule. Instead, I saved a few hundred bucks for an emergency and focused on paying off my debt instead. I wanted to pay my loans asap so I could properly save for the future, and I had a safety net (moving back in with my parents) to fall back on if times got really tough. I took a chance and bucked the rules, and it gave me the confidence to take control of my finances. Plus, I saved a lot of money on interest. It’s not a smart move for everyone, and not everyone agrees with it, but it worked for me.

The point isn’t to break the rules for the sake of breaking the rules. The point is that life is complicated, and the rules are often oversimplified to the point of being ineffective, just so they can be easily taught to others. They’re so oversimplified, in fact, financial experts rarely agree on them.


Don’t get me wrong—education is important, whether it’s history, grammar, sex ed, or financial literacy. However, unlike grammar rules, personal finance isn’t cut and dried. A lot of it depends on your individual situation, which makes it complicated.


You have to consider your own financial situation and mindset and do what works for you. Sometimes, that means bending the rules. For example, let’s say you start to pay off debt using the stack method (paying off high-interest debts first). It makes the most sense on paper because of compound interest, but let’s say your debt is so overwhelming, you get discouraged and give up on it altogether. The debt snowball (paying off smaller debts first) may work better. The snowball method bucks the basic rule of compound interest, yet research shows it works better for most people because the psychology matters more than math. In short, people aren’t computers.


What to Focus on Instead

Okay, you get it. Money management is more about behavior than rules. How do you learn to be good at money, then? Like most habits and behavior, it comes down to practice.


In high school, I was on the soccer team, and I sucked. My coach, bless her heart, explained how it all worked. I had to kick the ball with my foot at the right angle. I had to account for my position when I passed. I followed these rules meticulously, yet I still sucked. Finally, my coach told me, “Forget the rules. Practice your skills.” She put me in more games. She made me practice longer and harder. Eventually, I got better (not great, but better).

You can say the same for money, I think. The rules are useful and necessary, but without practicing your real-world skills, they will only take you so far.


Like a lot of habits and behaviors, the sooner you get started, the better. This is why it’s important to teach kids solid money habits early on (another thing Jump$tart is trying to do). For example, you could:

Many of us don’t grow up learning money skills, though. Our parents were just as bad with money as we are. If you didn’t get these basics yourself, yes, you need to learn the mechanics of building a budget, but more importantly, you need a solid reason to motivate yourself. If you don’t see a need to worry about money, what’s the point in learning skills or rules?


Before anything, it’s important to have a clear idea of why you want to get your money in order, whether it’s to travel more or to support your family. Without motivation, you’re just learning rules for the sake of learning them, and that won’t be nearly as effective as learning the rules to reach an important goal.




From there, you build better habits when you navigate your weak spots and challenges. For example:


It’s impossible to nail down the exact habits you need to improve your finances, because, again, so much of it depends on your own situation and personality. The overall point is: when you’re ready to fix your finances, it helps to be prepared for the work that goes into it. When we understand that money is more about mindset and behavior, we’re in a better place to fix the real issues so we can use those rules to our advantage.

Illustration by: Sam Woolley