To change bad habits, financial literacy push must go digital

When it comes to positive attributes, Americans think highly of themselves. For example, we tend to think we're nicer than we are. We also tend to think we're more attractive than we are. As it turns out, we also tend to think we're more financially savvy than we are.

Finance and technology
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A whopping 75 percent of American adults say they're pros at managing their money. But only 16 percent could answer five basic financial literacy questions on FINRA's National Financial Capability Study, like this one about compounding interest:

Suppose you have $100 in a savings account and the interest rate is 2 percent per year. After 5 years, how much do you think you will have in the account if you left the money to grow?
a) More than $102.
b) Exactly $102.
c) less than $102.

The answer is A, and we are opting to believe you knew that. But the bottom line is, Americans are financially unprepared, and existing education programs aren't working.

All the while, our financial lives are increasingly complex. There are more products out there than ever (5/1 ARMs, HSAs or Roth IRAs, anyone?) and we've got money with more institutions than we ever had before. What's more, we've got 401(k) plans that we have to manage instead of pensions that were managed for us.

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Our nation's leaders have grasped the poor state of financial literacy. Barack Obama discussed myRAs in his State of the Union speech this year. Back in 2003, the Bush administration created a Financial Literacy and Education Commission tasked with developing a national strategy on financial education. You can see how they've put some ideas to work at www.mymoney.gov.

The Financial Literacy and Education Commission hosts a quarterly open forum to discuss the initiatives it has under way. As you might guess, it's mostly policymakers who attend. I'd like to weigh in with an opinion from the private sector. Specifically, to highlight what doesn't work well—and how we can use new tools to do better.

1. Traditional financial education doesn't change behavior.

Zero. That's the impact on financial behavior that financial education programs have had thus far, at least according to this disheartening study published last year.

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Most programs focus on disseminating information via seminars, workshops, newsletters, fairs, brochures and the like. But knowing is only half the battle.

What good is it to know that saturated fats are bad for us if we keep consuming them? Inspiring behavior change is the real measure of success.

2. Data, data, data.

A big new arrow in our quiver of eradicating financial illiteracy is access to data. Most of our financial data exists in electronic form—even if it's a record of an ATM withdrawal. Having electronic records means we can use technology to aggregate and analyze it.

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In Silicon Valley you hear the term big data—a lot of data on a lot of people. Another term you hear is "the Quantified Self." That term refers to the act of keeping track of our daily habits with wearable sensors. Think Fitbit, the fitness activity tracking company.

The theory behind the Quantified Self movement is that by measuring and analyzing, we can understand, track progress and find areas for improvement. The same goes for money. If we can see how we've done, we can see how we need to improve.

"A great analysis of your data is useless if you don't have access to it at the right time. What we really need is information delivered in a way that helps us make measurably better decisions."

3. Moving forward means mobile.

But a great analysis of your data is useless if you don't have access to it at the right time. What we really need is information delivered in a way that helps us make measurably better decisions. That's where the second new quiver comes in: mobile.

We're increasingly turning to our phones for money matters. Pew reported that 35 percent of Americans engaged in mobile banking in 2013—up from 18 percent less than two years earlier.

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It's information when we need it. In academic parlance, it's "just-in-time information." In 2013 the Federal Reserve issued a paper entitled, "Use of Mobile Phones in Financial Decision-Making." It found that people who received helpful information on their phones (such as a text reading "low balance") reduced their spending.

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The authors hypothesized: "Because many consumers have near constant access to their mobile phones, these devices have the potential to provide just-in-time information that can influence consumer financial behavior and help them to make different, and perhaps smarter, financial decisions."

If the true goal is not just to educate people but to change their financial behavior, we now have evidence that digital tools and data can do exactly that.

—By Bill Harris, special to CNBC.com. Harris is CEO of Personal Capital.