Improving Financial Literacy Around the World
The importance of financial literacy has been hitting a fever pitch in recent years, with implications from the pandemic casting a bright spotlight on how countries are failing to teach their citizens basic principles.
Financial literacy for the general public boils down to the ability to buy a house, a car, to rent a home and even the ability to become an entrepreneur. Lines of credit are not extended to just anyone. So, sometimes people with good ideas are never able to bring them to fruition because they cannot secure the funds to bring their products or ideas to market. In many countries financial literacy can boil down to basic survival. Mexico, for example, admits financial education is lacking for its populace and is aiming to address it.
Banco Bilbao Vizcaya Argentaria (BBVA), the second largest bank in Spain took a closer look at what is happening on the global stage, including a report released by Standard & Poor’s that revealed much remains to be done.
“According to said report, based on the responses provided by people over 15 years of age from different regions of the world, only one out of every three have the financial knowledge required to face with certainty the changes that are taking place in the global system,” the article noted.
Their study shows that even within the European Union, there is a vast difference in financial literacy between countries.
Spain, it turns out, is lagging behind and “has a lot to learn from other developed nations in the world in terms of financial literacy.”
The devastation created by COVID meant that many were waylaid financially by the crisis, although BBVA notes that some countries fared much better.
The pride of Germany
Germany is a standout, according to the bank. The small country has the fourth largest economy in the world, a notable accomplishment for one that was involved in two world wars and reduced to rubble.
“Well, they say that there are lessons that can be learnt from past mistakes, and that is something that this country is very well aware about, after the bankruptcy and unsustainable levels of debt that riddled the country after both wars,” according to the article.
The post-wars economic slide seems to have made an impression on the German citizens that lived through it, they “learned to handle their savings and debt with extreme care.”
The German language uses the same word for both “guilt” and “debt,” which is notable to show their reluctance to go into debt. They look to the long-term more so than other EU citizens.
Saving is encouraged socially and within families and a mentality that is passed from generation to generation. As the article notes, it is a cultural source of pride.
Bridging the gap to financial education in the United States
As the BBVA article points out, the United States is a bit of an anomaly. The higher education system means that many young people enter adulthood with mountains of school debt and while there is more financial literacy, the inequality of American society “creates enormous gaps that still need to be bridges in the field of financial education.”
Miami entrepreneur Evan Leaphart steps up
Evan Leaphart said there are many projects he did not get off the ground early in his career because he did not have the financial literacy to do so. A recent study by Lendingtree shows that less than half of Americans have any idea what their credit scores are.
So, he found a creative way to teach kids about finance and credit scores by creating a chore-tracking app called Kiddie Kredit, a “mobile app designed to educate children on the credit system by completing chores.” Parents can enter chores into the app and as kids complete the tasks their credit improves. When they miss a chore, there is a decrease. Kids then earn rewards for “good credit” from their parents via “Bamboo Bucks”.
In the end, he hopes to narrow the wealth gap between minority communities and others, he told Florida Trend.