Today, we’re jumping into education geekery, but I promise to link it to personal finance! I’m going to focus on a learning theory called the zone of proximal development. Then, I’ll review why the personal finance community is important, and where it sometimes misses. Finally, let’s look at how this theory can support you as both a financial independence learner and mentor.
What Is the Zone Of Proximal Development?
The zone of proximal development (ZPD) concept originated with psychologist Lev Vygotsky. It has since been developed more extensively. Let’s review the basic concepts.
Consider that in a skill or area of knowledge there is a range of ability. For example, “writing” is a span from acquiring the physical ability to write to creating complex readable texts.
Within that range there are the things you currently know and can do on your own. There are others that you absolutely can not do or learn (yet.) In between, there is an optimal area where you learn best by interacting with others who are more experienced or knowledgeable. Generally, you cannot progress to a higher level of skill/understanding without working in this zone.
To follow the writing example – it is highly unlikely that one can move from being completely unable to write to
The zone of proximal development refers to that area where you are working just above your current level of knowledge/skill on concepts you can master with support. A simple graphic of the ZPD concept:
When working with already mastered concepts you are in the center of the circle. To move to higher levels of knowledge requires working on concepts/tasks that are just above your current ability. This is your zone of proximal development. The outer ring is those things you cannot currently do or understand. Hitting your ZPD is a continual process, not fixed. That is, the ZPD shifts as you acquire new skills and they move into the core circle of knowledge you have mastered. This is a learning theory – not a fixed knowledge continuum.
In education theory, this leads teachers to provide tasks for students that are above their ability to do on their own, but at which they can be successful when guided or collaborating with peers. This challenge, with support, leads to more effective learning.
One challenge is accurately assessing a student’s ability. If you fail to challenge a learner, or provide inadequate support, they may not progress. If you provide a task that is too difficult it can lead to slowed learning at best and frustration and disengagement at worst.
Scaffolding is a key concept within ZPD theory. Scaffolding means providing intentional supports for a learner to progress. Examples of scaffolds include:
- Beginning with a simplified version of a task
- Linking new learning to already mastered concepts
- Visual guides/aids
- Modeling a task
- Pre-teaching difficult vocabulary/concepts
Scaffolds help lift learners to higher levels of understanding. Effective scaffolding does not allow a student to complete a task without thinking or it will fail to advance understanding.
Collaborative learning is a key support. While some adherents to ZPD believe explicitly in teacher guidance to advance learning, others believe that working on a challenging task with more capable peers will advance understanding.
In either case, the power of working through difficult concepts with others has consistently been shown to accelerate learning. (As someone who didn’t enjoy group work as a student, I grimace at this but have to admit that I’ve seen its effectiveness in a classroom.) Even learners with similar knowledge shift zones of proximal development by raising questions and creating new understanding within the group.
Vygotsky believed that the most effective learning occurs within the ZPD through social interaction with others.
How This Applies to the Personal Finance/ Financial Independence Community
While that quick overview leaves out much of the nuance that is important to education theory, it highlights exactly how the ZPD is impactful in the FI community.
You hear a lot lately about the “explosion” of personal finance, financial independence, and FIRE in mainstream conversation. People seem to believe that this comes out of nowhere or because of a few individuals. I believe it’s because the community itself has allowed a growing number of people to work within their Zone of Proximal Development. Greater social interaction and a variety of scaffolding leads to both accelerated learning and more opportunity for new learners to jump in.
Scaffolding Through More Content
The growing number of voices writing on personal finance (the number of blogs on Rockstar Finance Directory is approaching 2100) means that there are more perspectives and approaches presented. Sometimes this growing number is considered dilution or unnecessary repetition. When viewed through the ZPD theory instead, it’s a huge benefit. It creates valuable and necessary support for new learners to jump into financial independence topics.
In short, more blogs and podcasts means more opportunity for individuals to find a scaffold or social community that fits within their Zone of Proximal Development! You can find narratives, models, visuals, and guides on just about any FI concept.
This variety of voices and examples is important because the ZPD for each learner can vary based on the topic and time they encounter a concept. One learner might have no problem at all with investing but struggle with creating additional income. Another may have a high savings rate but have no idea how to effectively deploy it. Both can easily find guidance and models in the FI community.
These are both broad examples. To take it even finer, think about the progression from no awareness of investment to tax loss harvesting! A learner will move through the ZPD dozens of times.
A large number of voices, perspectives, and approaches also allows for drilling down. As an example, I recently experienced ZPD learning in a very specific area:
A Recent Example of FI and ZPD
For the 2018 tax year, I needed to make a Backdoor Roth contribution. First, I wouldn’t have even known about the existence of the Backdoor Roth if I hadn’t read about it online. (I can’t remember where I first saw it or I would share.) And, just knowing about it wasn’t enough to enable me to do it with no support.
Fortunately, I found this great guide by Physician on Fire which exactly detailed the steps on Vanguard. Vanguard holds most of my investment accounts. A wonderful scaffold.
It gets better though. I worked through the steps in the post just before the new year. At the time, the steps on Vanguard had changed and did not look exactly like those presented. (POF has since updated with the new screens – the link above is the updated version.) Fortunately, this made it even more effective learning for me.
I had enough familiarity with Vanguard and investing concepts that this slight glitch required me to carry more of the thinking. I was still able to complete the task and am now confident that, if necessary, I can make this contribution in the future without the guide. Thanks, POF!
Interestingly, because I was already familiar with Vanguard and fund concepts, the “glitch” made it optimal ZPD learning for me. For someone less familiar, it might have prevented them from completing the task until the new update post. A perfect example of ZPD variance! (Sorry – I love learning theory!)
The FI community’s size and variety is a strength because it enables individuals to seek out information and work within their Zone of Proximal Development. The shared learning that happens through iterative posting, sharing, and online interaction enables more progress.
The FI community provides both scaffolding and social interaction, two keys for ZPD learning!
Vygotsky himself would be proud if he hadn’t died in Soviet Russia in 1934.
Where the FI Community (Sometimes) Misses
It’s not all perfect though. We sometimes miss in ways that limit learning, particularly for those new to financial independence. It’s important to keep these in mind on our mission to support others reaching financial independence.
Advanced Knowledge Can Make It Harder to Teach the Basics
One of the main dangers in ZPD learning theory is assuming a learner’s core knowledge is more advanced than it is. I made this mistake with a colleague which led me to create the Financial Independence Primer and FI Basics posts. This type of miss is often unintentional.
As the community continues to grow and evolve it is important to remember that there are constantly new learners entering. If you’ve been pursuing FI for a decade, it’s easy to forget how little knowledge you had in the beginning. This is why a math theorist may not be a great elementary math teacher.
New voices continually entering the content community is a benefit. They provide new access points.
For those writing on advanced concepts, I am certainly not suggesting that you revert to basic content. You are providing ZPD learning for others!
This is a natural, and usually unintentional,
Knowledge Messiah Lecture Stance
This failure I see less but find far more annoying. It looks something like this:
A FI Seeker says: “Hey all, I’ve created my first savings! I’m going to use it to pay off <insert any debt type here.>”
Knowledge Messiah jumps in: “That’s a horrible choice. It’s actually far more optimal if you take that $35 dollars and dollar cost average into this complex investment product (but make sure you assess the fee structure) and when the yield curve inverts move the big money I just gave you into whatever cryptocurrency is currently moving EastWest on data site XYZ. You’re welcome.”
Yes, that’s exaggerated. But, the general example holds. (I resisted posting some twitter threads here.) This isn’t about supporting someone, it’s about demonstrating the writer’s knowledge.
If it was an honest attempt at support – it’s a total failure. You have just discouraged someone from making financial progress and completely missed their zone of proximal development. We can assume that someone who has just created their first deployable savings is not yet ready to progress through most of those concepts.
If one is truly looking to support this learner and disagrees with their choice, a possible different reply that takes into account both learning theory and social support could look like: “Congratulations on taking your first steps! Paying down debt is a great choice. As you continue to create savings and are ready to make even more progress, you might want to look into (pick a new concept.)”
At the very least, please avoid discouraging others on their path to financial independence.
How To Use The ZPD
I’ve never believed that any learning theory applies perfectly to everyone or every circumstance. That’s why I love to explore so many different approaches. I know that learning happens best when one is
As A Learner
Pay attention to your own ZPD. In particular, recognize when you are trying to understand something for which you are lacking basic concepts. Back up, and search out support on those basic concepts. Do not push to frustration – it can prevent you from taking action.
Build a community. The online FI community is so vast (and growing) that you can, and should, seek out multiple voices that work for you and are typically producing content that is just ahead of your current level of understanding. If a specific writer almost works for you but is working just outside your ZPD, try exploring their earlier content. You can also pay attention to comments on a post, and potentially find others working in your ZPD.
It is also important to find other financial independence seekers for direct interaction. There are a vast number of options here ranging from online social options such as Facebook groups or Twitter to in-person meet-ups. It’s helpful from both a learning standpoint and for accountability to have a small group of like-minded individuals supporting your path.
As a Mentor
Pay Attention to Current Knowledge Levels: When you are ready to help others reach for financial independence, keep their ZPD in mind. Do your best to remember what it was like when you were first picking up these concepts. In your conversations, avoid pushing too far ahead of their current knowledge. While you want to share everything with them immediately, this will be counterproducitve in the end.
The infamous “glazed over” look is a good indicator that you’ve pushed outside someone’s ZPD. Conversely, don’t treat them as if they’re stupid or you may stay on the too easy side of their ZPD. I know – assessing is tricky!
Scaffolding through links: If you’re producing FI content online, one strategy to support more readers is to provide links to more basic supporting concepts in your more advanced content. This allows a learner to “bail” when content hits the incomprehensible level. They can then return after building the required knowledge. (Coincidentally, this also helps your content!)
Progress over Perfection: At all costs, recognize that what is sometimes seen as a “not optimal” approach may be a perfectly natural learning progression. Support progress over perfection!
What do you think about applying the Zone of Proximal Development to financial independence? Do you have any personal ZPD experiences or fails?
Check out other education geekery: Gradual Release of Responsibility and Financial Learning
Baby Boomer Super says
Know your audience & keep it simple, great advice! Bloggers serve as mentors & more blogs mean more opportunities to connect with someone who resonates. Couldn’t agree more!
Principal F.I. says
That’s a much shorter way to summarize it. Thanks!
Diana E Sung says
You may have just explained my annoyance with 95% of content on Reddit. Haha.
Principal F.I. says
Glad to help! Haha.
Savvy History says
I love creative connections like this between different domains (education and finance)! I think anyone who is a learner (hmmm…everyone), can benefit from observing the way they learn and even the type of feedback that works best for them.
I also like your suggestion to include more links back to basic content. I think I’m in so deep I forget how much I’ve learned along the way. Thanks!
Principal F.I. says
Thanks! You’re the master of creative connections between domains.