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>Financial Education – who’s responsibility?

>The current financial crisis has sharpened the focus on the need for better financial education across all segments of the population. Just as information and guidance on healthy eating and exercise can prevent a lifetime of obesity, effective financial education, when started at an early age, can prevent chronic financial health problems later in life.

Where this education should take place is a matter of debate. Whether education and guidance of this sort would be more effectively shared by parents and families or taught formally as part of the school curriculum. Here we discuss some of the issues on both sides.

Schools

Financial literacy is an important element of preparing young people for adult life, which in turn is one of the main purposes of the education system. Lessons in money and financial matters can be integrated into many other existing subjects, such as mathematics, citizenship, PSHE and with some imagination into art, design and manufacturing based subjects.

Teachers have the skills of explanation, motivation and effective delivery. They also have access to resources, books and technology. Banks and other financial providers have programmes available to support teachers and schools.

Teaching financial literacy in schools guarantees a uniform, minimum of knowledge. Admittedly the quality and effectiveness may vary from school to school, region to region, yet a basic level of delivery can be assured.

Children are in a learning environment at school and therefore may be more receptive. Some parents may lack the necessary time, expertise or interest to teach their children about money. This may perpetuate a downward spiral, where a lack of awareness is passed from generation to generation.

Parents

At present few teachers have the necessary experience or knowledge to competently teach financial education. Consequently they may possibly pass on their own beliefs or bad habits concerning their own finances. The training and resourcing required to up skill teachers will take time and money.

School curricula are already crowded with mandatory content. New criteria can only be added at the expense of something else.

Regardless of where you are reading this, is the state in the best position to impose a financial education curriculum? Is the example of huge debt and continually spending more than your income a great example to follow? So too, many of the banks whose financial attitudes have heightened the current economic problems.

The financial world exists outside of the classroom and many would argue that so too lie the better opportunities for learning. Examples include taking children shopping, encouraging them to save and take part time jobs. Showing by example how to budget, pay bills and make financial decisions are far more real when experienced in context.

We should also consider the differing religious and moral beliefs of parents and communities. For some, the principle of tithing or giving 10% to church or charity is fundamental and may conflict with a school curriculum. Other families and traditions have very strong views on debt or use cooperative systems for providing within communities.

These are some of the main arguments in the financial education debate. A definite solution is not immediately clear, however what is evident is the need for some kind of change. Parents and in fact young people themselves can access a range of financial information from a whole host of providers. They need not wait for others to take the lead. Schools on the other hand should be encouraged to provide at least a minimum explanation of key information as a safety net for those unable to access the information for themselves.

>The Financial Fairy Tales – Chapter 1 available FREE download

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The Financial Fairy Tales are a series of books to help young children learn about money, finance and prosperity principles.
The first book – Dreams Can Come True will be available at the end of January.
A free download of the first chapter is available from the site at www.thefinancialfairytales.com

>Dreams Can Come True

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The Financial Fairy Tales – Dreams Can Come True

Announcing the first in a series of Financial Fairy Tales aimed at children between 5 and 11.

With the aim of making learning about money serious fun – these stories educate as well as entertain and provide the foundations for sound money management later in life.

Taking an approach of making learning a fun and engaging process, the stories introduce financial concepts such as saving & borrowing, self employment and trading for profit.

Dreams Can Come True will be available from Authorhouse at the end of January 2010

Why isn’t Financial Education Taught in Schools

If ever there was a time for better financial education then surely it is now? When you look at the state of many of the economies around the world it’s a mystery why financial education is not compulsory schools. It is easy to blame banks, big business or governments for the current climate but it is the education of individuals that need to change.

This article looks at some of the arguments for and against mandatory financial education.

Why isn't Financial Education Taught in Schools imageAt school, we may have learned some skills necessary to get a job, but nobody tells us how to create or manage our wealth. If we cannot educate ourselves on ways to obtain and retain our money, we are headed for a future financial disaster.

In the USA, individual debt is growing 23 times faster than the economy. It is a similar situation in many other developed nations, for example the credit card debt in the UK is over £220bn or an average of £3175 per person. Thousands of college graduates who have invested in their education are facing a student loan crisis. The job market is shrinking, and the sour economy is preventing employers, parents and relatives from helping those who are behind on payments,” USA Today reports. “Student loan defaults are at their highest rate since 1998, and likely will go higher” People are even losing their homes and have no money to retire on. It is estimated that the average person today will require $ 1.5 million by 65 years of age to retire comfortably.

Some argue that a better way to teach children about money is in the home, which may have its merits but may create something of a vicious circle: when parents are financially illiterate — they’re not likely to teach their kids very well, are they? Which means that the minority of people, who are smart about money, will (potentially), raise kids who are also smart, while for the rest the cycle will continue.

Another argument put forward against financial education in schools, centres on the twin pillars of lack of time and lack of money. School curricula are already crowded places and a significant financial education programme would have to come at the expense of something already in place. Few teachers would have the necessary competence and confidence to deliver such programmes without the need for additional training and resourcing.

These arguments may be countered by providing financial education online or via other media accessible to students, and indeed their parents, 24/7. Young people will spend hours studying independently for subjects with a real personal interest, playing an instrument, making a social media page or learning to drive for example.
Funding may not be such an easy nut to crack but there are existing projects sponsored by banks and financial institutions around the world. Dissenting voices would point out however that if it was the banks that got us into this mess are they the best influence to help educate the next generation? Governments may also see the longer term benefits of providing financial education as saving them the money they may otherwise have to spend on social security in the future.

In conclusion it would appear that there is a growing tide of public opinion supporting the need for better financial education, which in my opinion should at least begin in schools. The debate will continue as to who should deliver what and when but in the meantime, parents and young people themselves can take a proactive approach and seek the resources currently available.

A great source for younger children is The Financial Fairy Tales series of award winning books, which introduce money principles and awareness via entertaining and engaging stories.

>Financial Education – a Global Perspective

>Continuing social, economic and political change over the last five years has meant that the need for financial capability in young people is even more pressing. In many western counties issues surrounding increasing levels of personal debt, crashing markets and their effect on pensions mean that there is a greater need for individuals to take a more active and informed interest in their own financial future.

This article looks at various initiatives for teaching children about money around the world.

In South Africa, Teach Children to Save (TCTS) is a one-day initiative designed to spotlight the importance of teaching the country’s youth about saving money. The objectives of the project include:
To raise awareness about the benefits of savings, financial planning and foster a culture of saving. To demonstrate the important role that the financial services sector can play in creating a financially literate nation. To initiate a national program that encourages a collaborative, industry-wide effort to increase financial literacy.

Teach Children to Save South Africa (TCTS SA) was launched during July Savings Month on the 25th July 2008. On this day, volunteer bankers and financial professionals became teachers for a day and delivered a one hour savings lesson to learners in grades 4 to 7. This pilot initiative laid the groundwork for an annual event that spotlights the important role that financial service providers can play in educating the nation’s youth about saving. While modelled on the U.S. program, TCTS SA was customized to align with South African culture, financial education needs and the school curriculum especially Economic Management Science.

Scotland was the first part of the UK to publish guidance for schools in this area, back in 1999 Learning and Teaching Scotland, published Financial Education in Scottish Schools – A Statement of Position. This document describes managing money is “one of the most important and challenging features of everyday living” while outlining a minimum entitlement within the school curriculum. Their aims are for young people to understand key financial and economic ideas; be skilled in managing their financial affairs; recognise the importance of using financial resources responsibly and be able to operate in a confident and enterprising manner.

The Scottish programme as part of the 3-18 Curriculum for Excellence is under-pinned by the expectation that every teacher is a teacher of Numeracy, Literacy and Health and Well-being. A thematic / topic framework is suggested which schools may adapt to their particular needs. The four main elements of Financial Education in Scotland include: Financial Understanding, Financial Competence, Financial Responsibility and Financial Enterprise

An Australian report, ‘Financial Literacy – Australians Understanding Money’, found that young people are particularly interested in learning more about issues such as budgeting, saving, managing debt and avoiding financial scams.
Australian schools have introduced a nationally agreed Framework that provides an integrated cross- curriculum approach for all students from Kindergarten to Year 10.
Consumer and financial literacy will be integrated in programs across English, Mathematics, Science, Humanities – (Business, Commerce, Economics, Technology and Enterprise) Civics and Citizenship and ICT. This will allow all Australian students in their compulsory years of schooling to develop knowledge and understanding, skills and values in consumer and financial literacy.

An example of a Chinese approach to financial education is a theatre program for children aged between 8 and 12 years old in the cities of Beijing, Shanghai, Guangzhou and Shenzhen.

The program is based on a comic book, entitled “Agent Penny and Will Power in Operation Finance”. Scenes are based on stories of daily life and present students with commonly-used financial tools and concepts, including budgeting and compound interest, as well as the formation of healthy financial habits.
According to schedules of the program, the Cheeky Monkey Theatre, presenting itself as the world’s first ‘Chinglish’ Theatre Company, will visit between 40 and 50 schools in Beijing, Shanghai, Guangzhou and Shenzhen over the next ten months, and this play is expected to be seen by around 20,000 children.

In summary, financial literacy is regarded in many countries as a key life skill. The financial world is characterised by a wide range of choices and often high complexity, and as consumers we all need to take advantage of this dynamic environment. Young people are being targeted as consumers at an increasingly early age and may face complex financial choices. As 18 year olds, they are likely to have access to credit and loans in a way that would have been unheard of 20 years ago. Providing young people with good financial literacy skills helps to establish responsible attitudes and good habits from an early age. It helps foster an attitude to managing money that can enhance their long-term financial security and lifestyle.