Five things you should know about financial education (2/5)
Published on 04-03-2015 by admin
2. Personal finance in the school curriculum can make a difference
As the level of understanding of financial concepts, services and products affects individuals’ financial decisions, ensuring at least a basic understanding of those concepts is crucial. Better-informed financial decisions will not only positively affect the economy as a whole but also individuals themselves.
Given today’s complexity in financial services, but also young people’s increasing exposure to banking (digital payments, mobile banking,..), the financial education process has to start early in life (OECD, 2005). Financial education as such is probably not the unique solution, but ensuring children have the tools to understand their financial environment is key.
To be effective and to encourage behavioural change, financial education should therefore be taught before the young generation engages in major financial transactions and contracts.
Parental education is of course important but “…if we leave it to the parents, we are accepting that we have an unequal society,” says professor Annamaria Lusardi from the Global Financial Literacy Excellence Center. (Prof. Lusardi will be speaking at the 9 March Financial Education Roundtable that we are organising in Brussels.)
Her research shows that familiarity with financial concepts accounts for as much as 50% of the wealth gap between affluent and low-income families. It shows school education can be a great equalizer.