The point of financial literacy learning is in letting people engage in available social opportunities and relations that lead to sustained wellbeing and improved financial performance during their lifetime.
Abstract
Low literacy is a serious problem in Canada. What accounts for literacy and how to teach financial literacy are the objects of continued debate. This paper synthesizes relevant information about various aspects of literacy. Brief information about literacy in Canada is provided. Different conceptualizations of literacy, including financial literacy, are discussed. The paper evaluates the possible causes of illiteracy in Canada. Recommendations are provided to improve literacy education and learning outcomes.
A Synthesis Paper about Adult Literacy
Low literacy is a serious problem in Canada. Thousands of Canadians fail to accomplish even the simplest tasks. Financial literacy is no exception: Canadians lack effective financial planning skills and cannot manage their financial needs. The causes of low literacy are numerous and varied. On the one hand, there is no one definition of literacy. On the other hand, traditional models of literacy fail to account for socioeconomic and educational factors that affect the state of literacy in the country. Educational violence is another problem: misbalanced and culturally inappropriate models turn literacy into an unachievable task. The point of financial literacy learning is in letting people engage in available social opportunities and relations that lead to sustained wellbeing and improved financial performance during their lifetime.
The Current State of Literacy in Canada
Low literacy is a serious problem in Canada. Thousands of people lack basic literacy skills and fail to cope with the simplest tasks. According to the International Adult Literacy and Skills Survey, at least 48 percent of adults in Canada demonstrate low levels of literacy (Literacy Foundation, 2005b). Of these, 20 percent score Level 1, and the remaining 28 score level 2 (Literacy Foundation, 2005b). Individuals at Level 1 of literacy have poor skills, whereas Level 2 individuals have limited literacy skills and can deal only with simple, comprehensive material (Literacy Foundation, 2005b). Individuals at Level 2 may successfully cope with everyday literacy tasks but face considerable difficulties with mastering new workplace skills (Literacy Foundation, 2005b).
At the international level, literacy levels are directly related to socioeconomic factors and wage distribution. For example, the range between the number of the most and least literate individuals in Canada is much wider than that in Sweden, and “with this variation in scores comes a greater variation in wages” (Literacy Foundation, 2005a, p.3). By contrast, the situation with workplace and financial literacy in Canada is much better than in other developed countries. Prose literacy scores are much higher in Canada than in the United States (Literacy Foundation, 2005a). In document literacy, Canada ranks very close to Norway (Literacy Foundation, 2005b). Canadians face little to no problems with problem-solving skills (Literacy Foundation, 2005b). Education plays a key role in the development of various literacy skills, and Canadians are willing to participate in education and literacy training. Between 1994 and 2003, the rates of adult participation in education in Canada increased from 36 to almost 50 percent (Literacy Foundation, 2005a). Nevertheless, the literacy situation in Canada leaves significant room for improvement.
The case is particularly problematic with financial literacy. The lack of financial literacy skills is a serious impediment to professional and career growth in Canada. Only fifty percent of Canadians create household budgets and use macroeconomic indicators to plan and predict their household costs (Buckland, 2010). Of those who have a household budget, only one third follows them closely (Buckland, 2010). The prevailing majority of Canadians are not confident or somewhat confident in their financial decisions (Buckland, 2010). The presence or absence of a household budget serves as the key indicator of financial literacy in Canadian populations (Buckland, 2010). Needless to say, low financial literacy has far-reaching implications for workplace performance in Canada. Individuals that fail to develop effective financial planning skills cannot successfully cope with their workplace-related tasks. Low financial literacy means that individuals cannot be confident in their workplace decisions and will face considerable difficulties, trying to distribute their job incomes effectively.
The causes of low financial literacy are poorly understood. Much has been written and said about the meanings and implications of literacy for workplace performance. However, little is known about what literacy is and how it works. Conceptualizations of literacy are so numerous, that they leave little room for the development of effective teaching strategies. Nevertheless, understanding the causes and consequences of low financial literacy is impossible without getting a profound insight into the theories and explanations of literacy and its role in the workplace and financial performance.
Conceptualizations of Literacy: What Accounts for Literacy?
Conceptualizations of literacy are numerous and varied. There is an emerging consensus among scholars that literacy is a social practice (Brandt & Clinton, 2002; Olson & Torrance, 2001). The popularity of the social practice model of literacy is justified by the fact that literacy plays a significant role in the social and mental lives of people (Olson & Torrance, 2001). Any democratic society fosters public access of its citizens to the written word (Olson & Torrance, 2001). Ultimately, many bureaucratic structures and institutional arrangements rely on record-keeping and writing (Olson & Torrance, 2001). As a result, the development and maintenance of structural relations in society are impossible without literacy (Olson & Torrance, 2001). The social relations paradigm treats literacy as a highly-contextual human activity, which is heavily influenced by local ways of life (Olson & Torrance, 2001). Literacy presents itself in a variety of contextual forms and changes in response to the ideological features of place and time (Brandt & Clinton, 2002).
The social practice model of literacy is placed literacy in the middle of the numerous social processes and organizations. This model implies that no social processes and organizations are possible without literacy. Writing and sustained talk is vital for the creation and maintenance of various social groups (Olson & Torrance, 2001). Writing provides the basis for the effective distribution of social roles within groups (Olson & Torrance, 2001). Writing does not create norms or laws but plays a powerful instrumental role, turning knowledge into an archival tradition that members of the same social group must follow (Olson & Torrance, 2001). Based on this model, societies and social groups use literacy to set explicit social goals and achieve them successfully (Olson & Torrance, 2001). The role of literacy in the establishment of local practices is no less important: family and employment, communication, schooling, and identity development heavily depend upon the level of literacy in society (Olson & Torrence, 2001).
The benefits of the social practice model are difficult to ignore. First, the model breaks and eliminates a reading-writing dichotomy (Brandt & Clinton, 2002). The model integrates writing and talking into a functionally single, unilateral system (Brandt & Clinton, 2002). Second, the social practice model creates and sustains a vision of multidimensionality and expands the notion of literacy beyond local contexts (Brandt & Clinton, 2002). Finally, the model resolves an ongoing theoretical complexity, which treats literacy as an essentially individual skill: in reality, literacy is a social achievement and a product of cultural transmission (Scribner, 1984). Literacy is always embedded in local practices and events (Darville, 2001). It extends beyond the local (Darville, 2001). Literacy is similar to a currency since it always buys into and directly relies upon a social organization (Darville, 1995). No organizational or financial task is achievable without literacy (Darville, 1995). Therefore, it is at least incorrect to say that literacy is an individual skill. Literacy is not a skill but a process and practice, which individuals develop while participating in the social activities that involve written language (Scribner, 1984).
In the current body of literature about literacy, the social practice model dominates. The model is equally praised and criticized for assessing the content of literacy from a social angle. Simultaneously, societies operate in the atmosphere of multiple literacies, whose meanings are not always easy to understand. These include but are not limited to financial literacy, workplace literacy, health literacy, etc. Multiple literacies expose and touch the diversity of ways in which literacy operates in any given society (Collins, 1995). Yet, the question of what financial literacy is and how it operates continues to persist.
Financial literacy can be defined in a variety of ways (Yates & Ward, 2011). Generally, financial literacy is “the ability to use knowledge and skills to manage financial resources effectively for a lifetime of financial well-being” (Yates & Ward, 2011, p.66). Financial literacy means that individuals have the skills, abilities, and knowledge needed to manage their financial resources and promote their financial stability and wellbeing. The current state of literature discusses financial literacy from several theoretical standpoints. Neoclassical economic theory suggests that individuals operate in highly competitive markets and seek to maximize their financial satisfaction (Buckland, 2010). More often than not, neoclassical consumers exhibit three essential characteristics: (1) they maximize their satisfaction through leisure and consumption; (2) they assume a long-term decision-making perspective and expect that their decisions will ensure lifetime satisfaction and wellbeing; and (3) institutional environment plays little to no role in consumers’ financial decisions – rather, the market creates competitive conditions and fosters effective pricing for the desired services and goods (Buckland, 2010).
Unlike neoclassical economics, behavioral approaches to consumption seek to provide rational explanations for the complexity of consumer behaviors and decisions. Behavioral economics suggests that financial literacy predetermines the direction of consumer decisions and their complexity (Buckland, 2010). Behavioral economists neglect or overlook the significance of institutional influences on consumer decisions and their financial outcomes (Buckland, 2010). In this context, an institutional model of financial literacy successfully integrates the most important features of the neoclassical and behavioral frameworks and provides the basis for analyzing the role of institutions in the development of financial literacy (Buckland, 2010). The model helps to understand how institutions affect and limit financial literacy in different population groups. Buckland (2010) is confident that institutions cause profound influences on financial literacy in low-income populations: institutions facilitate financial decision-making in low-income people through social programs and policies, easy-to-understand bank practices, and easy-to-access social services (Buckland, 2010).
Unfortunately, the multitude of literacy conceptualizations and perspectives can hardly help to reduce illiteracy in Canada. The ideas and conceptualizations of literacy are so numerous that they leave little room for financial literacy improvements. What accounts for literacy is a continued debate. What it means to be literate both financially and professionally is difficult to define. According to Jackson (2004a), workplace literacy means that individuals can successfully master complex strategies and rules of behavior in the workplace. Workplace literacy means that adults can be productive team members and can align their personal goals with those of the organization and other team members. When managers communicate the strategy and vision of the organization to their subordinates, they impose high literacy demands and expectations on them (Jackson, 2004a). High-performing individuals cannot be illiterate, but what literacy is and how it works each organization must decide for itself (Jackson, 2004a). The vision of literacy is always unique and culture-bound. This is one of the reasons why individuals fail to meet literacy demands in different organizations and workplaces. In this situation, illiteracy results from failure to adjust to the differing literacy requirements in organizations. However, numerous definitions and conceptualizations are not the only cause of illiteracy in Canada.
Literacy vs. Illiteracy: Other Causes
Education plays a determining role in the development of literacy. Education facilitates embedding literacy in the most important social practices. Financial literacy is no exception. The body of literature concerning financial literacy is very scarce, but it is possible to say that the inclusion of economic subjects in high school and college curricula supports and speeds up the transfer of financial knowledge and skills to individuals (Yates & Ward, 2011). Yet, education as a factor of improved literacy is not without controversy: the targets of literacy are extremely elusive (Jackson, 2004). The problems with reporting and evaluating literacy achievements zero the relevance of even the most sophisticated literacy programs (Jackson, 2004). Above all, education programs fail to account for the socioeconomic factors of literacy. As a result, thousands of illiterate individuals remain beyond the boundaries of literacy programs.
Socioeconomic difficulties and literacy are directly related, but the effects of socioeconomic problems on literacy are persistently overlooked. For example, violence and abuse may prevent women from enrolling in and attending literacy courses and programs. Violence is a relevant factor of school failure, and school participation increases the likelihood of repeated violence in families (Horsman, 2006). In this situation, women cannot improve their financial and workplace literacy. As a result, they find themselves torn and isolated from the most important social processes and practices. The lack or absence of effective teaching strategies further complicates the situation.
Literacy: Failure of Educational Violence
Educational violence is believed to be a serious barrier to acquiring productive, culture-bound literacy skills. Violence in literacy education means that (a) teaching strategies are torn or isolated from the community-based literacy practices and (b) what individuals learn in the course of education does not allow them to engage in productive social relations within their communities. On the one hand, educational violence imposes misbalanced standards and misconceptions about literacy on learners. On the other hand, it necessarily brings learners to a social failure, when they try to find decent employment, write professional reports, or compose church texts (Himley, Madden, Hoffman & Penrod, 1996). These learning experiences are extremely debilitating; they deprive individuals of courage and stimulus to become financially and professionally proficient. Thus, what can professional educators do to reduce the probability and risks of violence in literacy education?
Successful Literacy: Recommendations
The current body of academic literature discusses numerous ways of learning and teaching literacy, including financial literacy. It should be noted, that there is no standard or universally accepted model of what literacy education must look like (Levine, 2005). Social contexts and practices produce heavy impacts on literacy, and successful models of literacy education must be unique and tied to the specific conditions and circumstances of workplace/ financial performance. Literacy must be treated as a two-way street, which changes the ways individuals and organizations think and ensures that documents, requirements, and norms of performance are properly understood (Levine, 2005). Literacy education must be an ongoing process, which is neither project-based nor limited in time (Levine, 2005).
Literacy is essentially a social practice, and it must be taught within a community – this is what Ewing (2003) writes in his article. There can be no single or best approach for literacy studies. Literacy strategies, including financial literacy systems and solutions, must be diverse enough to reflect the diversity of literacy practices in different communities (Ewing, 2003). Every community must set their financial literacy expectations, based on the complexity of their financial operations and decisions. Teaching literacy within a community allows developing literacy skills and expertise that are sustained by this particular community (Ewing, 2003). These teaching approaches and systems emphasize the relevance of community-bound cultural practices and successfully integrate literacy impulses with the community’s daily realities (Ewing, 2003). This is what Darville (2009) calls “teaching as alignment” – when “the way to get to abilities of reading and writing is to keep in view the sense that they make in people’s lives” (p.14). This is also why all proposals for creating a national program of literacy in Canada are met with cautious optimism (Jackson, 2004b). Literacy is so peculiar that no national system can address its specificity and uniqueness. By contrast, community learning provides vast opportunities for raising the levels of financial and workplace literacy on a national scale.
Financial literacy is not limited to writing and reading activities but transcends to cover a multitude of social events. Financial literacy must be taught in ways that let adult learners utilize their skills and engage in professional or personal communication with their community or organization (Darville, 2009). The point of financial literacy learning is in letting people engage in available social opportunities and relations that lead to sustained wellbeing and improved financial performance during their lifetime.
Conclusion
Literacy remains a serious problem in Canada. Almost one-half of Canadians demonstrates low levels of literacy. The situation with financial literacy is no better – only fifty percent of Canadians create household budgets; of those, only one third follows them closely. The causes behind low literacy, including financial literacy, are poorly understood. Conceptualizations of literacy are so numerous that they leave little room for the development of effective teaching strategies. What accounts for financial literacy is difficult to define. Socioeconomic factors of literature are persistently overlooked. Educational violence and failure to develop effective, culture-bound models of literacy further complicate the situation. As a result, the basic question is what professional educators must do to raise the effectiveness of literacy programs and interventions. First, successful models of literacy education are always tied to the specific conditions of the workplace and financial performance. Second, literacy is a social practice and must be taught within a community. Third, teaching literacy is impossible without emphasizing the relevance of community-bound cultural practices and their place in communities’ daily realities. Financial literacy is not limited to writing and reading but exemplifies a complex network of activities and social processes. Financial literacy must be taught in ways that let adult learners engage in professional communication with their communities. The point of financial literacy learning is in letting people engage in available social opportunities and relations that lead to sustained wellbeing and improved financial performance during their lifetime.
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