The push to improve financial literacy has gained momentum in recent years, and for good reason. As personal finance becomes increasingly complex, the ability to understand terms like “compound interest,” “asset allocation,” or “Roth IRA” is more essential than ever. But financial literacy alone isn’t translating to widespread financial wellness. And that’s because information, while important, is not the same as application.
According to the FINRA Foundation’s 2024 National Financial Capability Study, 57% of U.S. adults could answer four out of five basic financial literacy questions correctly. Yet nearly 60% of those same respondents reported feeling anxious about their financial future. The disconnect suggests something deeper is at play. George Kailas, CEO of Prospero.AI, believes the missing piece is discipline.
“Knowing how the market works and knowing how to move through it are two very different things. Financial literacy is the foundation, but discipline is the difference-maker. Plenty of people can explain interest rates or read a balance sheet, but freeze when volatility hits. Real success comes when you can take what you know and apply it under pressure, without getting distracted by noise, emotion, or hype,” says George Kailas.
This gap between knowing and doing is especially pronounced during moments of financial stress. In early 2023, when Silicon Valley Bank collapsed and sent shockwaves through financial markets, many retail investors panicked. Despite knowing the importance of long-term strategies, some pulled investments or stopped contributing to retirement accounts. These moves, in hindsight, hurt more than helped. The reaction highlighted how knowledge can crumble under pressure if not reinforced by emotional regulation and clear goals.
Behavioral finance research backs this up. Studies have long shown that psychological biases like loss aversion, herd behavior, and overconfidence can override even the most rational financial plans. A 2022 Morningstar study found that the average investor underperforms their own investments by roughly 1.7% annually, largely due to poor timing decisions driven by emotion.
This is where discipline plays a crucial role. It is the bridge between financial understanding and financial action. It means sticking to your plan when headlines scream recession, resisting the urge to time the market, and avoiding lifestyle creep even when your income rises. It means not just knowing what a Roth IRA is, but consistently contributing to it even when other spending temptations arise.
Unfortunately, discipline is not as easy to teach or track as literacy. While schools and nonprofits have made great strides in introducing personal finance education, with nearly half of U.S. states now requiring high school students to take a personal finance course, few programs delve into the behavioral skills that underpin real-world financial decisions. Budgeting apps, robo-advisors, and AI-powered tools can offer guidance, but they cannot override human emotion.
Still, technology may be part of the solution. Kailas and others argue that well-designed financial tech can help nudge users toward more disciplined behaviors. From AI-driven spending alerts to predictive models that simulate long-term outcomes, digital tools can act as a second layer of accountability. But the goal is not to replace human judgment. It is to support it.
We don’t need more dashboards filled with data, according to Kailas. We need systems that help people make the right decision at the right time, especially when they’re under stress or uncertainty.
To be clear, financial literacy remains essential. But it is just one half of the equation. Without the self-awareness to manage fear, delay gratification, and stay consistent, even the best financial knowledge may never translate into meaningful outcomes.
In a world of economic turbulence, rising debt, and shifting job markets, perhaps it is time we expand the definition of financial education. One that includes not just how to read a 401(k) statement, but how to stay calm when it drops. Not just how to build a portfolio, but how to trust it through the dips.
Because financial success is not just about what you know. It is about what you do, especially when it is hardest to do it.