Foundations: Financial Literacy


This is Dun Carloway, a bronze age fort thought to be built in the first century AD.

It is on the Isle of Lewis, where I spent most of my vacations as a child. Often I played and ran around this structure, then many years later my children did the same.

While the walls have been reduced, most of that was by human hand taking away the stones that made up the walls.

However, it is clear that, at nearly 2000 years old, it is built on firm foundations.

So, whilst I talk often about change, transformation, bravery, stretching and more, in order for any of us or our organisations to embark on such journeys and shifts we must also have firm foundations that support us in our growth and change.

One such area is financial literacy.

Today I’ll share a great article from someone passionate about financial literacy and supporting people around their personal and investment finance.

Before that, some of my own thoughts.

I guess I am lucky in that a) I am innately good with numbers, and b) have always found personal and investment finance fascinating. So, I am always aware of what I earn, what I spend, as well as choices where to invest and how to invest, whether short, medium or long term. In short, I’m good with money and find it easy to work with.

However, I have found so many people struggle with this whether personally, professionally or both. As examples, I see some mentees and friends in their 30s and 40s go through top MBA programmes and struggle most with the financial parts of the programme. On the flipside I did mentor someone through the ICAS mentoring programme (so they are a Chartered Accountant) and as they went through their MBA programme they didn’t really realise what a rare thing it was that their training and experience made them highly financially literate.

Before going any further, a plug for ICAS. If you have children looking to go into a career in business of any kind, I’d highly encourage them to pursue the three-year post-university apprentice leading to the CA qualification. I have found it a massively strong foundation for my career on almost a daily basis since qualifying nearly thirty years ago.

Now, before sharing the article on financial literacy, a bugbear of mine with coaches is that so few of them are good with numbers so tend to avoid really looking at the numbers of the business their client leads. Yes, coaching is about supporting change and behaviour change is key to that. However, numbers also tell a key part of the story, so if you are hiring a coach I encourage you to be sure they can understand financial numbers as without that they can’t really truly feel the energetic impact of change in numbers and so their ability to support you around change is therefore limited.

So, to the article. This is not the first time I’ve shared an article from Georgie Loxton and it will certainly not be the last. A generous, brilliant and passionate educator about financial freedom. Oh, and if you are in a position to hire her to support your own financial freedom, do it!

The Great Truths

(originally published by Liberty Wealth here)

April is Financial Literacy month. I have mixed feelings about financial literacy as a ‘thing’. I do think it’s a huge problem that our schools teach us about the Romans and the Greeks, Subjunctives and Superlatives, Trigonometry and Calculus and NOTHING about money, how to manage it, or what it means in our life.

But on the other hand, studies have shown that traditional financial literacy classes do nothing to increase positive financial behaviours or improve financial health.

Why is that?

Well, it’s because it’s almost impossible to be rational about money (as Dan Ariely says, we are predictably irrational). Our brains are wired to do it all wrong. You can understand all the complexities of one type of mortgage versus another, or everything there is to know about a lease agreement, but when it comes to making a financial decision your psychology and the biases you don’t even know you have are going to take over.

What is useful though is understanding a number of money truths that if you can internalize and live your life by, they will almost certainly lead to a richer existence in every sense of the word.

Here is a list of money truths as told by Dr Daniel Crosby on his Standard Deviations podcast (my notes are added in italics). Daniel is a behavioural finance expert and a well-regarded speaker and writer. I highly recommend both of his books, The Laws of Wealth and The Behavioral Investor.


1) The Joneses aren’t as rich or as happy as you think. I promise you this is true. See a past blog post I wrote about the dangers of ‘Keeping Up’.

2) Get rich quick and get poor quick are both sides of the same coin.

3) The more complicated the investment advice the more expensive and the less useful. Complicated advice always seems enticing, but simple ALWAYS beats complex when it comes to investing.

4) A house is a place to live, not an investment. It might end up being a good investment but it’s not the right mindset to have about your home. I wrote about this (here andhere).

5) The only sure thing about stocks is that there are no sure things. If anyone ever tells you they have a ‘sure-thing’….run.

6) Stocks tend to pay well precisely because they hurt to hold. The hurt comes from uncertainty. Uncertainty gives us the return. If you don’t want to take on the uncertainty, you lose the return.

7) Your mortgage broker is lying to you about how much house you can afford. Of course, it all goes back to how they are incentivized. Charlie Munger once said ‘show me the incentives and I will show you the outcome’. ALWAYS make sure you understand the incentives of any financial services provider, particularly those selling something. I wrote about incentives here.

8) A raise in income shouldn’t mean a raise in lifestyle. Lifestyle creep is pervasive in Cayman. Earn more, spend more – a dangerous combination that puts financial freedom further and further out of reach. As I wrote here, the key is to make more money without wanting more stuff.

9) Forecasting is for weatherpeople. As Galbraith said ‘the only function of economic forecasting is to make astrology look respectable’. I wrote about this here.

10) Excess is never permanent and the truest words in financial markets are ‘this too shall pass’. Those four words are almost all you need to know when it feels like we are in a crisis.

11) You will never ever feel like you have enough money. I agree that if you are left to your own devices this is probably true. However, part of my work as a REAL financial advisor is to help my clients get to the point where they know what is enough and reach what Brian Portnoy calls ‘funded contentment’.

12) There is an inverse correlation between performance and time spent watching financial news. The mainstream financial media is about the worst place you can go for financial advice.

13) If it depreciates, don’t pay interest on it. Cars, boats….

14) You don’t have to be rich to invest but you do have to invest to be rich.

15) Infrequent splurges bring the greatest happiness. The problem is when the splurges become frequent and you end up at #8.

16) If it seems too good to be true, it probably is. It always is.

17) Compounding is magical. The problem is that we can’t compute compounding in our brains so we always underestimate the possibilities. Read about that here and here.

18) If you’re excited about an investment, it’s almost certainly a bad idea. Good investing is always boring.

19) Market corrections come as regularly as your birthday, Santa Claus and the Easter Bunny, so expect them. Expect them and embrace them (refer back to #6).

Know these 19 things and your financial health will stronger than almost everyone else around you. It’s not about maths or calculators or spreadsheets or ‘financial literacy’, it’s about your behavior and your brain.


Also published on Medium.

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