Real financial literacy goes beyond budgets to behaviour

Despite decades of effort and billions invested, most financial literacy programmes around the world struggle to create lasting change, especially in low-income communities where poverty is the norm.

The World Bank's Global Findex 2025 report shows that in 2024, only 40% of adults in developing economies saved in a financial account. That means millions remain just one unexpected expense away from sleepless nights and a money crisis.

Too often, financial literacy training focuses on the tools (budgets, calculators, debt plans) while ignoring the fundamental drivers of money behaviour (identity, emotion and belief).

Until these deeper forces are addressed, the knowledge alone won’t stick.

Every money decision we make is a conversation happening inside the brain between emotion, belief and conscious choice. Understanding this inner “tug-of-war” is key to creating lasting change. This is what Dr Steve Peters explains beautifully in the "Chimp Paradox", and it offers a helpful lens:

The emotional brain is very powerful. It is stronger and faster than logical, analytical thinking. That’s why, in moments of stress or temptation, the emotional brain often wins, overriding even the most well-laid financial commitment.

When it comes to managing money, the solution is not to suppress the emotional brain, but to acknowledge and work with it manage it while also reprogramming our beliefs and self-identity as a crucial part of the journey to financial independence.

Most financial education programmes teach budgeting, saving and debt management but ignore the emotional and psychological barriers that keep people stuck. Adults stuck in poverty often carry deep-seated beliefs, formed in childhood and hardwired in adulthood, such as “I am just unlucky and bad things always happen to me”, “my family has always been poor,” or “I am not good with finances and budgeting – that's for educated people.”

Without addressing underlying beliefs and emotional responses to money, knowledge and tools alone fall short. Like healthy eating, knowing what to do isn’t enough. Lasting change requires a shift in self-identity.

To embed lifelong financial habits, we must understand the neuroscience and psychology behind behaviour change. That means addressing three key components.

Suffering or reward: Change is triggered by either deep discomfort, like debt, stress or insecurity, or a compelling goal like building a home or educating your children. The emotional intensity must be strong enough to drive action and sacrifice.

Psychological mindedness: Understanding the tug of war and the role of emotions and self-identity is a crucial component of change. Being able to manage your mind increases the likelihood of new habits sticking.

Commitment and planning: This is where the practical tools come in. To support change, we need to empower people to set realistic, emotionally meaningful goals and develop practical plans for implementation and accountability.

People need all three points for lasting change otherwise motivation will wane soon after leaving the classroom.

Like a path that everyone walks as they cut across the corner of a thick lawn, eventually the pathway becomes embedded in the grass and walking that route is easy. Habits are similar in that they are well worn pathways in the brain. To change a money habit, we need to stop doing an old, damaging habit and repeat a new beneficial habit, until it becomes the new hardwired response. Habits are formed through a simple loop: Cue. Routine. Reward.

Organizations like Taking Care of Business (TCB) help individuals, many of them struggling, learn and commit to these kinds of habits.

TCB has spent 15 years working alongside unemployed adults and informal traders in South Africa, and the organization’s results turning around peoples’ lives are notable.

When participants begin TCB’s two-year programme, only 38% earn above the poverty line. By graduation, 82% do. Family savings rise from 17% to 77%. Participants' capacity to budget and plan increased from 22% at programme start to 68%. Year after year, lives are transformed as families break cycles of poverty and build financial resilience.

That’s success is not because TCB hands out better spreadsheets or budgeting tools - but because we work with the brain, not against it. Understanding that money decisions aren’t only about maths, but about identity, emotions and beliefs is crucial for changing behaviours.

Neuroscience shows us that every choice is a tug of war between the emotional brain, programmed beliefs, and conscious thinking. Unless financial education speaks to all three, lasting change simply won’t happen.

Here’s how TCB does it:

Identify their money-related triggers (cues).

These could include emotional responses such as the desire to soothe discomfort, alleviate stress or be seen as successful.

Build new, positive financial behaviours that are practical (routines).

These include creating a realistic budget, keeping track of money in and money out, setting a savings goal and diufferentiating between wants and needs.

Celebrate every win (rewards).

We engage the whole family as well as peer support groups to ensure short term and long term goals are tracked and celebrated.

By combining these strategies, TCB has created a human-centric financial education approach that gives people the agency and tools to take control of their financial futures. The result is individuals and their families becoming financially and socially independent.

When we deeply understand how our brains work and what it takes to rewire our brains, we can design holistic interventions that move way beyond traditional training. These solutions will create productive humans who are able to manage their emotions and make healthy money choices.

Crucially, we need these interventions early on. Habits formed between ages 20-30 shape lifelong financial futures. Early intervention can prevent debt traps and build greater resilience for young adults as they step into their careers and start families.

The future of financial education is human-centred, neuroscience-informed and addresses the whole person, not just their wallet.