June 1, 2016


Importance of Financial Knowledge

Why learn about personal finances? Did you know that the more knowledgeable in finances you become, the more likely you can increase your financial performance in the future? Many studies have shown that people who have financial knowledge are better off financially:

  • To help accumulate 3 times more wealth through retirement planning in advance. [1]
  • To minimize mistakes in money management and investment through financial knowledge. [2]
  • To plan your finances according to your life goals

Nothing Happens Without Taking Action

However, knowledge needs to be secured with action to reach financial goals. Just knowing about finances will not build fortune right away. You eventually need to incorporate knowledge with action:

  • Spare 15 minutes of lunch time today, go to a bank and open an investment account to bring in more profits. Money invested today is better than money invested tomorrow.
  • Take 3 minutes every morning to track expenses to change your spending habit.
  • Spare 30 minutes to talk about mortgage refinancing to repay your loan in 15 years rather than 30 years to save yourself money in the future

3 Essential Elements for Financial Training

The 3-Legged-Stool theory was proposed by Prof. Dilip Soman [3]. Based on the study by World Bank researchers [4], three elements –  “knowledge, numeracy, and behaviour” need to balance to enhance financial performance. Just as a stool is useless without all three legs, with just one or two elements, we cannot expect the most financial success.

  1. Knowledge: remembering and understanding financial concepts and jargons for long-term success
  2. Numeracy: being able to make make sound financial decisions by applying math
  3. Behavioural facilitation: getting people to act on their intentions
    (e.g. open bank accounts, set up investments, make a budget and follow)

Pinkfolio’s learning content as well as smart notification system is designed based on this 3-Legged-Stool theory as well as behavioral economics concepts. Pinkfolio aims to connect financial education with behavioral changes so that users can improve their financial standing.