Old-School Personal Finance Needs a Tutor
The average student who gets one-on-one tutoring performs better than 98 out of 100 students who don’t. This is a classic educational phenomenon known as “Bloom’s Two Sigma Problem,” first studied in the 1980s1. While the magnitude of this gap is alarming, there are some obvious reasons this might be:
Everyone learns differently. A teaching style that resonates with one student may not work for another.
A tutor who provides regular, individualized attention also acts as a personal accountability partner. You can’t hide when you’re the only one in the room.
One-on-one teaching is more interactive and engaging than traditional lecture-style or self-directed learning. “Now, class, open your textbooks to Chapter 4…” — snooze.
What if we apply this line of thinking to how we manage our money?
Everyone has a wildly different financial situation, simply because there are so many variables at play. There are the ones you can quantify: income, expenses, debt, investments, and so on. But your lifestyle, goals, and upbringing also play leading roles. This means that generic, classroom-style financial advice will put you significantly behind the curve compared to having someone give you guidance that’s carefully tailored to your unique circumstances.
On the other hand, we all share a common, primal instinct to revert to old habits when no one’s around. We need to actively fight this tendency — especially when it comes to our money. A recovering credit card addict can quickly relapse if they don’t follow a plan for long enough to form new habits. Like a boxer’s corner man supporting him between rounds, a money accountability partner keeps our plan on track when the consequences of deviating from it can be severe.
The third dynamic that contributes to the Two Sigma Problem is the student's level of engagement. Imagine sitting in a crowded lecture hall, a professor transcribing steps of a math proof onto a chalkboard. Now imagine reading an article about why bonds and tax accounting rules are important to your financial plan. Kind of like the chalkboard lecture, right? But what if managing your money felt more like chatting with a friendly professor during their office hours? Not only would that be more enjoyable, you’d absorb more information and be better equipped to make financial decisions on your own.
So why don’t we provide one-on-one tutoring or financial help to everyone? Historically, it’s been too costly or logistically impossible to do at scale. And this disproportionately affects people who can’t afford expensive personal guidance. If we devise a way to make this cheap and easy to access, today’s average classroom student will transform into a classroom superstar. The average household’s financial planning, confidence, and peace of mind will be lightyears ahead of where it is now. Because of technology like on-demand and AI-based tutoring, we’re within arm’s reach of a world where everyone has an educational or financial tutor in their pocket. Today’s 98th percentile will become tomorrow’s mean.
Bloom, Benjamin S (June–July 1984). "The 2 Sigma Problem: The Search for Methods of Group Instruction as Effective as One-to-One Tutoring"