Dear Editor,
The Ministry of Education recently conducted a workshop to improve literacy on ‘scholastic guided reading’. While this is commendable, a critical subject that needs to be taught early in schools is that of financial literacy which has, sadly, not been part of the curriculum in our educational system. Financial literacy including digital money is important for all of us and it makes sense to learn about these concepts early in life. Some institutions have now realized its importance and are starting to introduce various financial educational programs. The Government of Ontario, for instance, has recently rolled out changes to the math curriculum with a new-found emphasis on financial literacy. For example, Grades 4 and 5 students now learn about various payment methods while Grade 8 students focus on balancing budgets and the perils of compound interest.
A UN study shows that only 33% of the world is financially literate, meaning only a third of individuals are equipped to deal with one of the crucial aspects of human well-being – money management. Closer to home, a recent survey by the Caribbean Development Bank paints a bleak picture of financial literacy across the region where a staggering 70% of Caribbean residents lacks fundamental knowledge of key financial concepts. Study after study has shown that a lot of people fall into financial distress due mainly to a lack of financial education and discipline in managing money. As a result, they are unable to make ends meet; spend more than they earn; have little or no savings; get into mounting debt; and are unable to pay bills. Some people come into a pile of money either through lottery winnings, government payments, inheritance, or a gift, but sadly lack the financial knowledge on how to effectively manage such windfall. In some instances, they end up being broke after a short while.
Anyone can potentially be in such financial predicament which can contribute to bankruptcy, relationship problems, and massive stress ultimately leading to a slew of health-related problems. Money revolves around much of life and it simply cannot be ignored. It has created a unified world economy and forms a crucial link in establishing value, facilitating exchange, and creating commerce. It is indeed the tie that binds all humanity and is like air to the economy. To Christians, it is often misquoted as the root of all evil but it is not. The real biblical quote is “For the love of money is the root of all evil”. Regardless of someone’s economic status, that person must be spending, saving, borrowing, or investing. These financial tasks must be carefully understood and managed to avoid financial pitfalls. Everyone is duty-bound to understand the basics of finance and the earlier the better.
Despite being a relatively new field of study, financial literacy including digital money, has become increasingly important for governments, educational institutions, financial institutions, community groups, private organizations, and individuals. Without it, there can be broad implications for the economic health and stability of countries. In an interconnected world where economic forces transcend geographical boundaries, financial literacy has emerged as a global imperative as a substantial amount of the world’s population as mentioned above lacks fundamental financial literacy skills – from understanding basic numeracy to an awareness of the financial landscape. The World Bank emphasizes the pivotal role of financial education in promoting economic development, reducing poverty, and fostering inclusive growth.
The implications of financial decisions ripple through societies, affecting not only individuals and families but also entire nations. Therefore, the need for accessible and comprehensive financial literacy resources becomes paramount. The World Bank, the International Monetary Fund (IMF) and the OECD have launched major programs to draw attention to and increase national investments in financial literacy. Countries in the industrialized world have also launched wide-ranging national strategies to increase the financial literacy of their citizens over the medium to long term. The Canadian government established the Financial Consumer Agency of Canada responsible for protecting the rights and interests of consumers of financial products and services and supervises federally regulated financial entities, such as banks, and strengthens the financial literacy of Canadians.
The US Department of Treasury established the Financial Literacy and Education Commission in 2003 tasked to develop a national financial education web site (www.Mymoney.gov) and a national strategy on financial education. In 2022 the European Commission developed the Financial Competence Framework for adults in the European Union. In the United Kingdom, the Money and Pensions Service (MaPS) is an arm’s-length body of the Government that works with stakeholders across a range of sectors to help improve financial education in schools, at home, and in the community. Alongside parents and others, schools and teachers are uniquely placed to help children and young people to develop money skills they need. Every minute of the day, someone, somewhere is either spending, saving, borrowing, lending, or investing. Finance is the grease that keeps those wheels in constant motion.
Today’s globalized world has allowed for more integrated markets and this requires becoming financially literate since money moves around the world every second of the day and impacts us all. Without a good foundation in financial literacy, people are vulnerable to being exploited; accumulate debt they are unable to carry; make poor financial decisions; and face financial insecurity. These challenges often perpetuate a cycle of poverty and stifle opportunities for personal development and growth which in turn have a negative effect on the economy as whole. Financial education should therefore be the bedrock upon which informed decisions are made, empowering individuals to navigate the complex terrain of personal finance with confidence and resilience.
There is no such thing as being perfectly financially literate and all individuals have a need for ongoing learning on personal finance. There is also no pass-fail benchmark that separates financial literacy from illiteracy. Financial outcomes (such as income or wealth) are not good indicators of financial literacy and persons with lower incomes or wealth are not, by definition, necessarily less financially literate. The issue is that too many individuals do not bother to learn how finance works and do not take advantage of resources even though these are widely available through the internet and business news channels. Also, there are institutions like banks for instance, including public libraries, related professional associations, and other forums where numerous financial resources exist to enable financial literacy to be learned by anyone.
All it takes is a willingness and an effort. Everyone, regardless of their profession (law, medicine, architecture, politics, music, engineering, academia, etc.,) should make a determined effort to become financially literate. All stand to gain in the long run. For example, if there is a requirement for politicians to be financially literate, there will be improved oversight, accountability, prudent public financial decisions and investments where everyone benefits. After all, financial literacy is not a privilege but a universal right.
Sincerely,
Lal Balkaran
IIA-Guyana Founder and Internal Audit
Consultant
Toronto
