Where in the World is Financial Education?

Carmen_Sandiego

Over the last few weeks I have spent most of my time looking at published articles about financial literacy pedagogy.  Today I am going to summarize some of my findings about what is being done for finance education in different parts of the world as well as offer some thoughts on the effectiveness of some of the different models.

As of 2014 financial literacy education is mandatory for all student in the U.K. school system. In the U.K. it will be integrated into the existing Math courses as well as included in a new Citizenship course.  A quote from the Business Time article about U.K. mandating financial education has made me think about all of the inconclusive research I have been reading: “There is a lot of conflicting data as to what kind of lessons actually work. We have built a library of research papers topping 1,400 globally and are essentially studying our way to inertia”.  I feel like this has put into words a lot of what I have been feeling over the last few weeks.  Reading studies that suggests financial literacy education may not accomplish what we hope it will had made me think twice about whether it was a good idea or not; but all along my gut reaction is still that there is such a need for this education that we need to be teaching it even if the research is inconclusive about the results.  I have also been feeling like the research may not be capturing the whole picture and that providing the education is still beneficial, even if what the research is looking at isn’t providing improved results.   I think we need to take action and work to increase the effectiveness of financial education as time goes on rather than sit back and wait for the perfect education model to exist before we, here in SK, jump on board.

One of the difficult things about measuring the effectiveness of financial literacy education is that just because we increase knowledge doesn’t mean that will carry over into practice for students. I think we know this from looking at healthy eating, environmental stewardship, recommended physical activity, and other lifestyle/behaviour-based lessons. Knowing that we should be eating healthier, treating the environment better, and increasing our physical activity is a large jump from actually doing these things in our day to day lives. Even when we know exactly how to do them, actually doing them day-to-day is a different thing. I see financial literacy as being a  behaviour-based area of study. I think that there is value to teaching financial literacy, even if we don’t see the overwhelming results proving that we have a completely financially literate society- whatever that means. I think that we should try to arm our students with whatever knowledge, skills, and tools we can so that when they want to work towards healthy finances in their lives they have a better sense of how to do it and where to look for help and resources they need.

I also think there there is benefit to give students knowledge, even if they don’t use the information immediately. We routinely teach students about nutrition and reference Canada’s Food Guide even though nobody expects that the average high school or university student will be following it religiously. Teaching nutritional information at a young age gives students the tools the need to make healthier eating decisions when they decide it is appropriate for themselves. I think that teaching financial literacy is a similar concept: give students the knowledge and hope that at some point they will turn this knowledge in to informed behaviours.

Some of the research also suggested that financial behaviours are learned at home and not taught in the classroom- but I think that this can be changed as well. We all likely learned most of what we know about financial decisions from the modeling around us- but we learn from all of the things we are exposed to- and adding lessons on financial literacy into the curriculum will increase the tools an individual has for decision making in the future.

This Business Time article on personal finance education in the U.K. also identified Australia and Singapore as leaders in financial education and recognized that Canada and New Zealand seem to be following in the same direction. Apparently by Canada they mean Ontario and BC as I haven’t found a lot of other Canadian provinces/territories with financial education mandates yet.  For Saskatchewan I found an inactive link on the ministry site that says the “Ministry of Education supports teaching financial literacy skills in education” (http://www.publications.gov.sk.ca/details.cfm?p=65669)  The summary that accompanies this inactive link states that the finance minister visited an entrepreneurship classes in Moose Jaw to learn about their business plans and cited this as “just one example of financial literacy education in Saskatchewan”.  I would say the ministry is falling short of “supporting” financial literacy.

When I looked at what is being done in BC I found a 2010 document published by the BCBEA (British Columbia Business Education Association) outlining what needs to be done to improve financial literacy education in B.C..  I was originally unable to find any information on what had been done with this document, but now I have discovered that BC has integrated financial literacy education in to their new Math curricula.  I will look further in to this in the future as the Math curriculum is where I originally pictured financial literacy as a good fit, but I am now feeling unsure about whether Math teachers are best suited to teach it or not.  I still see concerns with it being in all classes in all grades because I feel all teachers are definitely not equipped to teach the skills, but I do like the idea that these conversations need to be happening throughout our schooling and repeated.

In Alberta it seems that financial literacy topics are taught under the Wellness umbrella as part of either Life Skills or Career and Life Management.  In talking with a friend of mine that taught Life Skills in Alberta she revealed that it is a ‘joke course’ for kids and identified that it was painful to try to educate Grade 9 students on a topic they weren’t interested in at all. I think that program status is so important for financial literacy education to be a success. As I mentioned in an earlier post, I think that personal finance content needs to be taught in a course equivalent to a senior level Math.  The content has the same difficulty and needs the ‘core content’ status to be as effective as possible and it needs to be taught by properly trained teachers. I also think that adding the content to every class is more content for already busy teachers with no financial management training (such as my friend) to teach.  I don’t think that we can be surprised when research is showing we aren’t getting the desired results.

While I can see the benefit of having personal finance education in all subjects in all grades, I also have some concerns with that form of implementation.  Teachers in today’s classrooms are already over-burdened with meeting the increasing demands placed upon them.  I worry that if the teaching of financial literacy falls on the shoulders of all teachers it will become nobody’s responsibility and will be taught superficially for the most part.  Another concern with all teachers covering financial literacy concepts is that we won’t have properly trained teachers teaching a difficult subject: one that many teachers do not fully understand themselves.  With broad-based mandates, such as the one implemented in Ontario, it is also difficult to ensure all students are receiving lessons on a variety of concepts in different grade levels and impossible to make sure all intended topics are covered at some point in their schooling.  I think that a broad-based mandate, if used, needs to be paired with a specific personal financial management course that follows in the upper years or there needs to be a division of personal finance topics to be covered at different grade levels. I started this course thinking that personal finance/financial literacy was largely a Math topic that could be integrated into the Math curricula, but I have shifted my opinion to think that personal finance does need to be a stand-alone course as many of the concepts needed aren’t Math related.

What I think needs to happen is for schools to offer education that works to encompass families and communities in personal finance education. If we start a financial literacy movement in the schools there is no reason we can’t make literature and resources available for families as well and aim to start that conversation at home.  It isn’t something that would happen from Day 1 of implementation, but the conversation needs to start somewhere as it is being left to parents and many parents are not having ‘the money talk’.

In May CBC published an article about a Saskatoon teacher, Albert Couture, teaching financial literacy lessons in his Grade 6 & 7 classes.  Despite the fact that the content is not mandatory here in Saskatchewan, he has managed to fit it in to the curriculum.  He uses a program called The Real Game that I am interested in checking out (I looked it up, but it is subscription-based and I was unable to play a trial round. I will email asking for a trial account).  The Real Game “pays” students monthly salaries and they use the funds to create their dream life.  Quotes in the article from Couture’s students suggested a steep learning curve for these students as they discovered how far a monthly income needs to stretch to cover expenses: “I was planning on getting all these nice cars, then it kind of hit me that I could only get a bike” said one of the students.  It is this kind of reality-based games that seem to be working for financial education rather than simply learning personal finance literacy definitions and concepts.  “Jumpstart surveys (Mandell, 2006) have shown consistently that high school students who play a stock market game are significantly more financially literate than those who do not.  This implies that classes which are interactive, relevant, and fun may be more effective than those that are purely didactic” (Mandell & Klein, 2009).  I think that too often teachers that don’t understand the concepts of personal finance education well teach it superficially and offer regurgitation-based concepts rather than using higher levels of Bloom’s taxonomy.  I think that some of these reality-based games push students beyond the regurgitation of concepts and force them to apply what they know in a ‘real-life’ situation.

There were a few other things that I learned from the CBC article.  The first was that I should stay away from the comments section of an online article: ignorance is shared freely!!  That being said, there were a lot of comments that showed support of the need for personal finance education in the school system.  The other was that a recent BMO survey showed that parents would rather talk to their children about sex than about family finances.  I found this interesting because these are the people we are trusting to teach our future generations about finances.  Not only are studies showing that the general public is not equipped with the knowledge needed to teach personal finance skills; but they also don’t want to do it. There is also a document called “The Birds and the Bills: having the money talk with your kids” shared on GetSmarterAboutMoney.ca (sponsored by the Ontario Securities Commission- Investor Education) suggesting that it is a difficult conversation to have with your kids and a guide is needed.  I think this is part of the battle- it should be a constant education, not ‘a talk’.

This lack of personal finance knowledge in the public means that the average teacher is unlikely to have the knowledge needed, or the teaching skills, to teach these concepts well. To me this highlights the need for government mandated financial literacy education as well as extensive teacher training programs to ensure teachers are properly qualified to be teaching the topics.

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“The need for financially well-adjusted individuals is of great significance, as financial adversity does not only lead to financial hardship but also to emotional and psychological issues such as depression, distress and relationship problems”. –Liezel Alsemgeest, Behavioural Finance lecturer, University of the Free State, South Africa

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