When people talk about improving financial literacy, the conversation often focuses on teaching practical skills: how to budget, how to save, how to avoid debt. These lessons feel concrete and actionable. But recent research suggests that the most effective way to change your financial behaviour might be something far less obvious: learning in a more abstract, flexible way.

The new year is often a time when people vow to get a grip on their personal finances. My recent study with my colleague Dee Warmath explored why traditional financial education often fails to translate into good habits that leave us better off.

We found that while people generally do need to improve their financial literacy, simply teaching facts and formulas isn’t enough. What really matters is how adaptable your financial knowledge is when life throws you a curveball.

Most financial education programmes, such as those offered to undergraduate students at university, rely on explicit learning. This means teaching rules and definitions, then testing whether you can recall them. That approach works well for exams, but real life rarely looks like a textbook. You........

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