The financial literature is a property of a set of skills and knowledge that enables one to make effective and informative decisions with all of their financial resources. Increasing interest in personal finance is now the focus of state-run programs in countries including Australia, Canada, Japan, the United States and the United Kingdom. Understanding basic financial concepts allows people to know how to navigate within the financial system. People with proper financial literacy training make better financial decisions and manage money better than those who do not have such training.
The Organization for Economic Cooperation and Development (OECD) started an intergovernmental project in 2003 with the aim of providing ways to improve the standards of financial education and literacy through the development of general financial literacy principles. In March 2008, the OECD launched the International Gateway for Financial Education, which aims to serve as a clearinghouse for financial, information and research education programs worldwide. In the UK, the alternative term "financial capacity" is used by the state and its institutions: the UK Financial Services Authority (OJK) initiated a national strategy on financial capability in 2003. The US Government also established its Financial and Educational Literacy. Commission in 2003.
Video Financial literacy
International findings
An international OECD study published in late 2005 analyzed financial literacy surveys in OECD countries. A number of findings include:
- In Australia, 67 percent of respondents indicated that they understood the concept of compound interest, but when they were asked to solve the problem using a concept only 28 percent had a good level of understanding.
- A survey in the United Kingdom found that consumers are not actively seeking financial information. The information they receive is obtained by chance, for example, by taking out pamphlets at the bank or having a chance to speak with bank employees.
- The Canadian survey found that respondents considered choosing the right investment to be more stressed than going to the dentist.
- The survey of Korean high school students showed that they experienced a score failure - that is, they answered less than 60 percent of the questions correctly - on tests designed to gauge their ability to choose and manage credit cards, their knowledge of saving and investing for retirement, and their awareness of the risks and the importance of insuring them.
- A survey in the US found that four out of ten American workers did not save for retirement.
"However it is encouraging that some of the evaluated financial education programs have proven to be quite effective.Research in the US shows that workers increase their participation in a 401 (k) plan (a kind of retirement plan, with special tax advantages, allowing employees to save and invest for their own retirement period when an employer offers a financial education program, whether in the form of a brochure or a seminar. "
However, academic analysis of financial education found no measurable evidence of success in improving participants' financial well-being.
According to the Asian Development Bank survey of 2014, more Mongolians are expanding their financial options, and for example now comparing lending rates and savings services through successful TV drama launches focusing on the fiscal literacy of the poor and the poor not vulnerable. household. Given that 80% of Mongolians refer to TV as their primary source of information, TV series drama is identified as the most effective vehicle for messages on financial literacy.
In addition, more and more researchers of financial literacy raise questions about the political character of financial literacy education, arguing that it justifies a shift in greater financial risk (eg school fees, pensions, health care costs, etc.) to individuals from companies and governments. Many of these researchers argue for more critically and broadly oriented financial literacy education in focus; education that supports individuals better understand injustice and systemic exceptions than those who understand financial failure as an individual issue and the character of financial risk as apolitical. Many of these researchers work in social justice, critical pedagogy, the paradigm of feminist and critical race theory.
Maps Financial literacy
Asia Pacific Middle East Africa
A survey of women consumers in Asia Pacific Middle East Africa (APMEA) consists of basic money management, financial planning and investment. The top ten of the APMEA Financial Literacy Index Women MasterCard are Thailand 73.9, New Zealand 71.3, Australia 70.2, Vietnam 70.1, Singapore 69.4, Taiwan 68.7, Philippines 68.2, Hong Kong 68, 0, Indonesia 66.5 and Malaysia 66.0.
Australia
The Australian Government established the National Financial Consumers and Literacy Task Force in 2004, which recommended the establishment of the Financial Literacy Foundation in 2005. In 2008, the Foundation's functions were transferred to the Australian Securities and Investments Commission (ASIC). The Australian Government also runs programs (such as Money Management) to increase the financial literacy of Indigenous people, especially those living in remote communities.
In 2011 ASIC released the National Financial Literacy Strategy (www.financialliteracy.gov.au) - informed by previous ASIC research reports 'Financial Literacy and Behavioral Changes' - to improve the financial welfare of all Australians by increasing the level of financial literacy. This strategy has four pillars:
- Education
- Trusted, independent information, tools and support
- Additional solutions to drive improved financial welfare and behavior change
- Partner with sectors involved with financial literacy, measure its impact and promote best practices
The ASIC MoneySmart website is one of the key initiatives in government strategy. This replaces the FIDO and Understanding Money website.
ASIC also has a MoneySmart Teaching website for teachers and educators. It provides professional learning and other resources to help educators integrate digital and financial literacy into teaching and learning programs.
A number of Australian universities offer financial literacy courses, such as Monash University (BEX2001: You, Money & Life), Macquarie University (AFAS300: Financial Literacy Principles), University of Western Australia (FINA1109: Managing Your Personal Finance) and The University of Melbourne (FNCE30008: Financial Road).
Networks Know the Risks of web and phone applications, newsletters, videos and websites developed by ANZIIF insurance membership agencies to educate consumers about insurance and risk management.
Saudi Arabia
A national survey was conducted by SEDCO Holding in Saudi Arabia in 2012 to understand the level of financial literacy in youth. The survey involved a thousand Saudi youths, and the results show that only 11 percent are keeping track of their spending, even though 75 percent think they understand the fundamentals of money management. In-depth analysis of the SEDCO survey revealed that 45 percent of children do not save money at all, while only 20 percent save 10 percent of their monthly income. In terms of spending habits, research shows that items such as mobile phones and travels account for nearly 80 percent of purchases. Regarding their lifestyle financing, 46 percent of youth rely on their parents to fund large ticket items. 90 percent of respondents stated that they were interested in improving their financial knowledge.
Singapore
In Singapore, the Singapore National Institute of Education established the Initial Financial Literacy Hub for Teachers in 2007 to empower school teachers to instill financial literacy into core curriculum subjects to instill pedagogical good activities to engage students in learning. Relevant and authentic day illustrations like today enhance learning experience to build financial capabilities in youth. Separate with evidence-based practices in schools, research on financial literacy was spearheaded by Hub, which has published many studies of the impact on the effectiveness of financial literacy programs and on the perceptions and attitudes of teachers and students. A longitudinal study of the impact of financial literacy education on behavioral and behavioral changes is underway. The basic study of financial literacy at Singapore School 2008/9 (Koh, 2011) involved more than 6000 students and a thousand school teachers. This is Hub's vision to empower educators to equip their students to be financially savvy so as to make informed decisions and discipline in managing their personal finances. Hub is committed to pioneering high-quality education programs with research embedded for continuous improvement that provides evidence-based practice.
The Singapore Government through the Monetary Authority of Singapore is funding the establishment of the Institute for Financial Literacy in July 2012. The institute is jointly managed by MoneySENSE (national financial education program) and Singapore Polytechnic. The Institute aims to build core financial capabilities across a wide spectrum of Singaporean residents by providing free and unbiased education education programs for working adults and their families. From July 2012 to May 2017, the Institute reaches more than 110,000 people in Singapore through workshops and talks. Some of the topics covered in the workshop and the talks include:
Europe
Belgium
The FSMA is tasked to contribute to better financial literacy from savers and investors that will enable individual savers, insured persons, shareholders and investors to be in a better position in their relationship with their financial institutions. As a result, they will tend to buy products that do not fit their profile.
Switzerland
A study measured financial literacy among 1500 households in German-speaking Switzerland. Testing the three concepts of compound interest, inflation, and risk diversification, the results show that the level of financial literacy in Switzerland is high compared with results for other European countries or US residents. Further research results indicate that higher financial literacy correlates with the participation of financial markets and mortgage lending. A related study among 15-year-old students at the Canton of Friborg shows substantial differences in the level of financial literacy between French and German students.
The Swiss National Bank aims to improve financial literacy through iconomix initiatives targeting high school students. The new public school curriculum will cover financial literacy in public schools.
United Kingdom
The UK has a special agency to promote financial capabilities - Money Advice Services.
The Financial Services Act 2010 includes provisions for OJK to establish the Consumer Finance Education Agency, known as CFEB. Starting on April 26, 2010, CFEB continued to work on the FSA's Financial Capabilities Division separately from OJK, and on April 4, 2011, was renamed the Money Advice Service.
The previous strategy involves spending FSA approximately Ã, Â £ 10 million per year for a seven point plan. Priority areas are:
- New parent
- School (program submitted by pfeg)
- Young Adult
- Workplace
- Consumer communication
- Online tools
- Money advice
The baseline survey conducted 5,300 interviews in the UK in 2005. The report identifies four themes:
- Many people fail to plan ahead
- Many people take financial risks without realizing it
- Debt problems are severe for a small percentage of the population, and more people may be affected in the economic downturn
- Aged under 40, on average, financially less able than their parents
"In short, unless steps are taken to improve the level of financial ability, we save problems for the future."
There are also many charities in the UK working to improve financial literacy such as MyBnk, Credit Action, Economic Speaking Project, Citizen Advice Bureau and Private Financial Education Group.
The financial literacy in the British Armed Forces is provided through the MoneyForce program, run by the British Royal Legion in collaboration with the Department of Defense and Money Advice Services.
North America
Canada
In 2006, Canadian securities regulators commissioned two national investor surveys to measure people's knowledge and experience with investment and fraud. The results of both studies indicate there is a better need to educate and inform investors about capital markets and investment fraud. Education in this area is very important as investors take more risks and responsibilities to manage their retirement savings, and the large baby boomer population enters retirement in North America.
In 2005, the British Columbia Securities Commission (BCSC) funded the Eron Mortgage study. This is the first systematic study of a single investment fraud, focusing on over 2,200 Eron Mortgage investors. Among other things, the report identifies that an approaching investor is retiring without adequate resources and a prosperous middle-aged man vulnerable to investment fraud. This report shows that investor education will become more important as baby boomers enter retirement.
United States
In the US, the national non-profit organization, the Jump $ tart Coalition for Private Financial Literacy, is a collection of corporate, academic, nonprofit, and government organizations working for financial education since 1995.
The US Treasury established its Office of Financial Education in 2002; and the US Congress established the Commission on Literacy and Financial Education under the Literacy and Financial Education Act in 2003. The Commission published the National Strategy on Financial Literacy in 2006.
While many organizations have supported the movement of financial literacy, they may differ in their definition of financial literacy. In a report by the Presidential Advisory Board on Financial Literacy, the authors call for a consistent definition of financial literacy where financial literacy education programs can be assessed. They define financial literacy as "the ability to use the knowledge and skills to effectively manage financial resources for a lifetime of financial well-being."
The Economic Education Council (CEE) conducted a 2009 Country Survey and found that 44 countries currently have personal financial education or K-12 guides in place. However, "only 17 countries require high school students to take courses in personal finance."
The Center for Financial Literacy at Champlain College conducts a biennial survey of high school financial literacy requirements across the nation. The 2017 survey found that Utah has the highest state requirements in the country, while in Alaska, Delaware, DC, Hawaii, Rhode Island and South Dakota, students are entirely dependent on their local school board initiative.
In July 2010, the United States Congress passed the Dodd-Frank Wall Street Reform and the Consumer Protection Act (Dodd-Frank Act), which created the Consumer Financial Protection Bureau (CFPB). CFPB has been commissioned, among other mandates, by promoting financial education through Consumer Engagement & amp; Educational group.
The current approach to informing adults is usually from a deficit perspective with educators seen as experts providing knowledge to passive students; however, the recommended approach will incorporate a transformative learning framework in accordance with the Quarter Century National Quarter Century Financial Quarterly Project (NEFE). The transformative learning model is the most established in adult education; Within this framework, adults begin through a psycho-cultural process to gain a new and/or revised interpretation of financial beliefs and attitudes that inform and shape new perspectives and behaviors. In addition, according to Xiao et al., It is recommended that financial education be given to adults so as to correlate with their readiness to change as in the Transtheoretical Behavioral Change Model Prochaska et al. The social work of finance is a transformative learning model developed by Reeta Wolfsohn, CMSW at the Center for Social Work Finance. Although originated in 1997 from Wolfsohn's work with women as femonomics, it was expanded in 2005 for all individuals, regardless of gender. Financial Social Work is a multi-disciplinary psychosocial approach that helps individuals examine and re-evaluate their money minds, attitudes and beliefs, and as it increases self-awareness and self-esteem, it empowers individuals to build long-term healthy habits leading to greater financial security.
Financial Literacy to incorporate the concept and tools of personal financial planning should be taught to young people early in High School. This financial education should include concepts like the 50/30/20 Rule of Budgeting, and Rule 72. The 50/30/20 rule recommends spending 50% of a person's income on living necessities such as housing and food, 30% for entertainment such as travel and meals, and 20% to be kept for short and long term needs. Rule 72 calculates the amount of time it takes for an investment to double once by dividing 72 over the interest received. The third concept is Time Value of Money (TVM) which calculates the future value of the initial or annual investment.
References
Further reading
- "Improving Financial Literacy - Problem and Policy Analysis" OECD 2005
- Lucey, T. A., & amp; Cooter, K. S. "Financial Literacy for Children and Adolescents"
- Federal Reserve Bank of San Francisco. " Community Investment: Financial Education " 2009.
- M. Schuhen/S. SchÃÆ'¼rkmann: "Build the validity of financial literacy", Review of International Economic Education, Elsevier, Amsterdam 2014.
Source of the article : Wikipedia
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