The explosion of self-help books on personal finance is testament to the demand for advice in this realm.
We need to be wary of what and who we listen to, because when it comes to telling you what to do with your money and why you aren’t rich yet, it’s easy to drown in the cacophony of advice that passes for financial wisdom.
In her critically acclaimed book Pound Foolish, Helaine Olen writes: “These experts paint themselves as our financial saviours, while often neglecting to mention they make a living (and a good living) not just from their television appearances and books, but also by their agreements with everyone and everything from mutual fund companies and credit reporting agencies – not to mention the host of ‘products’ they try to sell us. This sets up a basic conflict.”
Olen’s book provides a scathing commentary on popular personal finance experts of our time, from Suze Orman and Robert Kiyosaki to Dave Ramsey and David Bach, most of whom earned their money by convincing many of us that we are so helpless that we need the help of their books and product lines.
Olen also tells of Harvey Houtkin, the father of day trading, who made his millions not by convincing others that they had the ability to make successful stock picks themselves, but by racking up millions in commissions from customers of his day-trading firm, while losing hundreds of thousands of dollars on his own investments.
It’s important for us to teach teenagers and young adults how to critically evaluate the advice or advertisements they come across, particularly because the advertisements for all manner of money-making or investing schemes are increasingly targeted at this lucrative demographic.
Whether it’s day trading or cryptocurrency investing, “finfluencers” are now all the rage, feeding their target audience the slick, snappy 30-second video reels that claim to demystify investing and show them how to make hundreds of thousands of dollars with little investment of time and just a bit more in terms of money.
Many of these influencers are paid by companies to promote certain financial products, many of which they hardly understand nor invest in themselves.
These finfluencers are not licensed or regulated, which, in turn, means no accountability.
Many youngsters jump headlong into these schemes, but haven’t heard of due diligence.
That’s why a key part of financial education and empowerment programmes should delve deeply into financial fraud and scams.
These youngsters need to know what financial scams look like and why so many people fall prey to them.
They need to know the common terms and phrases scammers use and understand what "due diligence” means, why it’s important and how they can do it themselves.
They need to be shown how widespread financial scams are and the devastating effect they have on the lives of those affected. This makes it real for them.
They start to see how scammers prey on people’s financial naivety and begin to understand why so many financial fraud goes unreported, due to shame and guilt.
Most importantly, they are able to protect themselves and others around them because of this knowledge and understanding.
They also apply this learning in other areas of their lives, such as seeing through fake promises and claims made by many advertising companies.
The ability to keep a calm head and realise that all that glitters is not gold is a critical life skill. That’s a crucial part of an effective financial empowerment process.
Marilyn Pinto is the founder of KFI Global
