SA should follow UK example of compulsory Financial Literacy Education

Peter Atkinson, National Technical Portfolio Manager at the FIA.

The introduction of compulsory financial literacy education into the UK National Curriculum for school children from the age of 15 is a positive move towards improving the nation’s personal finance skills and should be considered for inclusion in the Sout

This is according to Peter Atkinson, National Technical Portfolio Manager at the Financial Intermediaries Association of Southern Africa (FIA), who says that few South African schools provide a basic overview of personal finance in subjects such as Economic and Management Sciences, which may not be sufficient to prepare them to manage their finances effectively in the future.

“As a result, it is typically the financial intermediary that carries the responsibility of ’educating’ consumers about financial planning issues, at which stage it could already be too late to avoid adverse financial repercussions.”

“Considering South Africa’s low household domestic savings rate (currently -0.02%) and the latest National Credit Regulator (NCR) statistic that 46% of the 9.05 million credit active consumer population have a negative credit listing, many South Africans could benefit from financial literacy education at a school level.”

The UK financial literacy programme will teach children how to manage bank accounts including credit or debit cards, plan and manage their personal finances, understand taxes and savings, risks and reward, as well as consumer rights and responsibilities in financial contracts. “These are basic financial principles that many consumers find overwhelming or confusing, which can result in financial problems in the future if they are not effectively managed,” says Atkinson.

The UK’s decision followed a survey conducted by the National Children's Bureau (NCB) and Personal Finance Education Group (PFEG) which found that 96% of over 1 000 children from the ages of seven to 16 wanted financial education lessons in school.

Should a similar survey be conducted in South Africa we could expect to see similar results as people generally find financial affairs confusing and are hungry for knowledge on how to handle their finances effectively, says Atkinson.

“In order to improve the level of savings in the country it is necessary to educate the nation about the benefits of saving and how to manage their overall finances from a young age,” concludes Atkinson. “For those consumers who find it difficult to handle their finances, it is advisable to seek the advice of a reputable financial planner who can assist them to understand and manage their finances in a way that will best suit their lifestyle and needs.”