Understand the Personal Finance Ecosystem

General skills and competencies influence all parts of a person’s financial life, from whether they have the vocabulary to understand the terms of a financial product to whether they know where to find trustworthy information. Like other Foundational Factors, general skills and competencies influence every part of the framework and are present for every individual. The impact they have varies based on a person’s lived experience.

Consider these examples:

• James struggles with math in the classroom and is easily overwhelmed by budgeting; he opts out of his school’s personal finance elective.
• Jin is a skilled negotiator and communicator and is never afraid to request more favorable terms on an account or raise questions when something doesn’t look right on a statement.
• Riley’s issues with impulse control make it difficult to save money; they often feel like they’re falling behind on their goals.
• Hana’s employer requires cybersecurity training; her knowledge makes her less susceptible to scams in her personal life.
• May is a refugee learning a new language and new concepts like credit; she finds translation difficult.

Socioeconomics points to the economic variability and systemic inequities that people experience, while geography acknowledges that many economic opportunities and challenges are place-based and can vary widely by region and zip code. As with other factors throughout the Ecosystem—and especially within Foundational Factors—an individual may not have full control over this aspect of their life.

Socioeconomics and geography greatly influence a person’s available choice set. Consider these examples:

• Imani lives in a state where schools are not required to offer financial education coursework and attends a school that is under-resourced; she wants to take a class to learn about personal finance but doesn’t have the option to do so.
• Ali is able to start a business with full funding from his family after graduating college with no debt; their generational wealth gives him a head start to building his own net worth.
• Pat would like to open an online checking account, but his community has limited Internet access; he lives in a rural area and finding reliable transportation to physical bank locations is a challenge.

Climate is increasingly relevant to these factors. Consider these examples:

• Drought, flooding, wildfire, and other climate-related events can wreak havoc on local economies dependent on agriculture and other land-based resources and industries.
• Natural disasters, rising sea levels, and changing flood plains can undermine homeownership as a way to build wealth.
• Insurance costs increase alongside climate risk.
• Some cities or regions lack the infrastructure to handle changing weather patterns, which can create unexpected financial hurdles for people.

Values and beliefs underlie how an individual approaches and experiences many of the other factors within the Ecosystem. They often impact a person’s willingness to learn and engage with financial practices in the first place. Values and beliefs can be conscious or subconscious, and they can change over time. Consider these examples:

• Sofia has very low levels of trust in the financial system and chooses not to use banking services.
• Malik is solutions-focused and tenacious in the pursuit of his goals; his strong sense of self-belief allows him to overcome many obstacles and setbacks.
• Kai is a single parent under enormous work pressure; their energy is devoted to the day-to-day and their sense of overwhelm makes it difficult to think about the future.
• Linda is a self-assured investor; she takes bold risks to build wealth for her family and is persistent despite big market swings.

Culture informs a person’s values and beliefs, and a person’s family often shapes their money mindset and behaviors. Culture can sometimes be overlooked as a footnote, but it’s often at the heart of people’s financial lives and their well-being. Importantly, traditional financial education—when unexamined and generalized—is susceptible to upholding systems of power and influence while reinforcing narrow views of the “best” or “correct” ways of managing one’s financial life. Consideration should be given to whether financial education efforts are prescriptive in a way that can be tone-deaf, misaligned, or oppressive to non-dominant groups. Consider these examples:

• A community prefers collectivism and pushes against individualist approaches to money management.
• Some religious traditions require refraining from charging or paying interest, but may continually be taught about it.
• Communities that have been discriminated against for generations at the hands of an economic system built on slavery and violence may choose not to participate in formal financial services because of their financial trauma.

Family financial socialization refers to the ways that financial knowledge, attitudes, and behavior are transmitted and developed within a family setting. Consider these examples:

• Elena’s family talks about money openly and frequently, while her friend’s family considers it a taboo topic; unlike her friend, Elena engages with financial topics. whenever she can and is comfortable and confident in making financial decisions.
• As an adult, Anders mimics his parents’ financial habits, while his sister Liv rejects what was modeled to

Family composition also affects financial life. Consider these examples:

• Alejandro lives in a multigenerational household, and some family members’ documentation statuses make it difficult to find work.
• Hannah experienced an expensive divorce and lost her home; she is living with friends until she can afford her own apartment.
• Amara’s mother has many children to support, so Amara picks up odd jobs after school to help pay the bills.