Making financial literacy a priority
Nahla El-Zibawia| The Daily Star
The Organization for Economic Cooperation and Development’s Secretary-General Angel Gurria once stated: “Improving financial literacy has become an essential means toward greater economic, social and financial inclusion and an integral part of financial reform to prevent future crisis.” But what is financial literacy?
How can we overcome having financially illiterate people?
What role can education play?
And is financial education the right solution?
“Financial literacy is the ability to understand how money works in the world: How someone manages to earn or make it, how that person manages it, how he/she invests it … and how that person donates it to help others,” according to Wikipedia. Specifically, it is the skills that help an individual to take the right decisions when using their financial resources.
With a continuously rapidly changing society, the skills that youth need also change. In the past, societies were striving to reach high literacy rates. Policymakers and civil society worked hard every day to make sure that a high percentage of the country’s residents know how to read and write, yet at that time they didn’t put the same amount of effort into financial literacy.
However, today’s generation is being raised in a very difficult world and when the time comes that they are in charge of their own finances they will need the right skills and information in order to do it in an efficient way. But how will they be able to do that in the right way if most of the young generation gains their financial skills from their parents?
Although, the 2015 OECD report stated that 84 percent of the students who discussed money with their parents are more financially literate than those who don’t. In this constantly changing world, the young generation needs a more systematic and educative way to learn financial literacy skills.
Accordingly, education has proved that it’s one of the best solutions for erasing illiteracy from our societies. Hence, this shows that to eliminate financial illiteracy, education should be the ultimate solution. Consequently, the OECD’s “principles and good practices for financial education and awareness” suggested that financial education should start at an early stage by integrating it into school curricula.
However, incorporating financial education into school curricula is a long process because decisions should be taken on the policy level for it to be implemented. But how can we reach a society free of financial illiteracy if financial education is not yet assimilated into the school curriculum?
Even if the most effective and sustainable way to increase financial capabilities is through schools, another option could be in informal education via building citizens’ skills through training sessions and boot camps on the subject. This training may not have the same effect on the student as formal schooling since it is shorter and more condensed, yet one of its competitive advantages is that it will be tailored to the needs and age of the participants with a specific objective to be delivered.
One of the financial literacy training sessions I encountered in the last two days in the Outreach and Leadership Academy in Sidon was “MoneySmart,” training designed by Eventa Lebanon that works on giving youth the financial skills needed in life. It aims to increase the participants’ financial managerial skills.
Although boot camps such as MoneySmart are capable of delivering the knowledge needed, they would be of greater benefit if this happened as part of the school curriculum. Such training not only acts as an informative session; it also helps to shed light on the essentiality of financial education, showing us how important it is for today’s leaders and policymakers to make financial literacy a priority.
Nahla el-Zibawia is project coordinator of the Outreach and Leadership Academy at the Hariri Foundation for Sustainable Human Development.