What is financial literacy?
Being financially literate or financially educated, essentially means to understand how investments work through the lens of finance and accounting. The idea of being financially literate is to make better use of financial resources for a lifetime of financial well-being (President’s Advisory Council on Financial Literacy, 2008).
An upsetting 67% of adults worldwide are financially illiterate (Source: S&P Global FinLit Survey). This high percentage of financial illiteracy leads to poor business and personal financial choices, which ultimately affect our global economy. For this reason, the World Bank, the United Nations and the Global Financial Excellence Center (GFLEC), among others, are aggressively looking for ways to improve the efficiency of finance education programs.
The main cause of financial illiteracy derives from the complexity of the current scheme that is used to teach/learn finance and accounting. It is made up by countless sophisticated concepts that take at least 1 year and 1 textbook worth of information to learn. Not every one has the time or educational level to grasp it. The traditional model’s high complexity is what taxes the access to financial literacy (see figure 1).
The traditional model was quite an innovation for its day back in a Rennaissance Italy of 1494 but the growing complexities of our world demand a more efficient processor of financial information; a fact even the American Accounting Association (AAA) agrees with in their video: "AAA vision of our future."
After more than 5 years of research and development, we were able to apply the properties of shape dynamics and quantum network theory to the field of investments. The resulting picture is a simple unified structure which makes learning the fundamental dynamics of finance and accounting easy and fun. Understanding finance and accounting with this level of clarity helps participants make better financial choices; the main idea behind financial education (see figure 2).
The possibility of building a quantum business model was predicted by past president of the American Accounting Association (AAA) Dr. Joel S. Demski and Oberlin College physicist Dr. Stephen A. Fitzgerald, in the paper: “Quantum information and accounting information, their salient features and conceptual applicatios" (Demski et al. 2006, p. 35), where they point out the absence of fundamentals of the current scheme and express their excitement for the prospect of an updated quantum mechanical version.
Our model shows that quantum structures can indeed provide a reduction in complexity when describing the dynamics of a system (Gu, Mile et al. 2012) and thanks to this, we bring an important solution to the problem of financial literacy. We intend to make our course available online to further enhance the access to this crucial field of study and are looking for a strategic alliance to make this happen.
From the quantum business model we created Flow into Profits, a fully immersive learning experience that includes all necessary materials to understand the new model in less than 24 hours (about 14 hours on average). The effectiveness of the quantum business model is backed up by solid empirical evidence as we have administered pretest/posttest examinations to 400 business professionals with truly surprising results (see figure 4).