Some thoughts on improving financial literacy

None are more open to abuse by the financial services industry than those who aren’t financially literate. Recent events in the funeral insurance and the credit life industries paint a rather sorry picture. Despite various steps by industry participants a

School is definitely the place to start

For a number of years SAIA has been running financial literacy projects targeting people in the LSM 1-5 group. Their aim is to improve basic financial literacy by introducing concepts such as budgeting and personal financial management to as many individuals as possible. In 2007 the third phase of the SAIA/LOA Inzala project kicked off. This financial literacy consumer education project has taken 49 047 people through a full-day community workshop to facilitate financial literacy education.

As part of the project attendees receive coursework titled “Manage Basic Personal Finance.” And each participant has to complete a household budget assignment and test before completing the course. The Financial Sector Charter limits the branding that may be attached to these courses and as such workshop attendees are only told that the course is sponsored by LOA and SAIA, with no other direct benefit to the organisations. The ‘reward’ for the sponsors is that “SAIA and LOA members that contributed to the project will be guaranteed Financial Sector Charter Points as the project is fully complaint with the Charter consumer education standards and implementation guidelines.”

The workshop and other awareness programmes are commendable. In our view, however, the best work being done by SAIA is at school level. In partnership with the FSB they’ve invoked a Financial Literacy in Schools project. And that’s where the best long term return will be gained. On SAIA’s instruction an independent company, Bright Media, assisted in the concept, management, delivery and reporting for the ‘Money Matters’ Financial Literacy project. They reached 1 763 teachers through 35 training workshops across the country and developed 10 000 Managing Your Money multimedia resource files for grade 10 and 11 learners. There are now plans to roll out a similar project to improve teacher skills for the new Economic Management Services (EMS) course for grades R to 9.

Could independence bring critical mass?

SAIA’s efforts to improve financial literacy in poorer communities and schools are commendable. But going forward it might be better to find a way to centralise financial consumer literacy efforts through an independent body. FSB representative Gerry Anderson hit the nail on the head when he mentioned (at SAIA’s recent report-back) that it would be great if more organisations than just SAIA and the LOA got behind education initiatives. The ideal would probably be for the FSB to bolster its financial education function and direct the expenditure of monies collected on a voluntary basis from all financial services industries.

The argument for a single cohesive approach to financial literacy education in the financial services environment is strong. Without it we simply have too many organisations duplicating efforts, cost structures and even education initiatives.

The right versus privilege debate

There’s an interesting advertisement on television at the moment. In the advert, various individuals raise the argument that education should be a right and not a privilege. We believe their choice of words is rather unfortunate. Education is not something that can be ‘given’ to an individual. The suggestion that it’s a right has confused many of the country’s children who now believe they ‘receive’ an education by simply attending school.

The ‘right’ that these people should be talking about is that every South African child has the ‘right’ to access to education. Children that receive this right are indeed privileged. And those who benefit from the right to access to education and enjoy the privilege of receiving that education will only have themselves to blame if they don’t emerge with a brighter future. And that’s something they alone can accomplish.

Editor’s thoughts:
Once we accept that education is both a right and a privilege we can go about implementing solutions that make sense for all South Africans. Do you think a single independent financial services education body makes sense? Add your comments below, or send them to gareth@fanews.co.za