Over the past eight years, I have been actively involved in writing, training and coaching on topics relating to financial education. Through interaction with thousands of Jamaicans from all walks of life, I have realised that the number one problem that prevents most people from achieving their financial goals is their lack of understanding of basic money principles.
Financial literacy is defined as the ability of individuals to make appropriate money decisions by learning the principles that relate to the management, growth and preservation of their money. When people are educated about the appropriate actions to take with their money, then they are more likely to save towards their goals, manage their debt, purchase assets such as a home, and make positive contributions to the economic development of the country.
Anecdotal evidence points to an overwhelming demand from Jamaicans for practical information on or about basic financial strategies such as budgeting, debt control, investing options and retirement and estate planning. Although some financial institutions have been offering public seminars to address some of these issues, their initiatives have been insufficient to meet the country’s requirements.
There is now an urgent need to provide a coordinated national financial literacy programme to adequately disseminate critical information throughout all sectors of the Jamaican society. I often wonder why I learnt so many subjects in school that later proved irrelevant to my life, yet a crucial topic such as money management was never addressed in my primary to tertiary education.
Around the world, financial literacy education is an important focus of governmental agencies involved in finance. Let’s look at some of the programmes that have been developed in some other countries:
FDIC Money Smart Programme
The Federal Deposit Insurance Corporation (FDIC) was established In the United States to preserve and promote public confidence in the financial system by insuring deposits in banks and thrift institutions. In 2001, this independent agency of the US federal government developed a national financial education campaign called Money Smart, to “help individuals outside the financial mainstream develop financial skills and positive banking relationships.”
The FDIC collaborates with financial institutions, non-profit organisations, and community- and consumer-based groups to disseminate financial education using its Money Smart educational material which covers topics such as saving, borrowing, credit card management and home ownership. To date, the agency reports that it has distributed over 750,000 items of Money Smart curricula and has reached over 2.4 million consumers across the world.
NFLP in Trinidad & Tobago
The National Financial Literacy Programme (NFLP), launched in January 2007, is spearheaded by the Central Bank of Trinidad and Tobago. According to the NFLP’s website, the purpose of the programme is to develop “a nation of citizens who are conscious about and capable of managing their finances.” The NFLP’s aim is to change people’s beliefs, attitudes and behaviours around money issues, and give them the skills to function in a sophisticated financial environment.
The NFLP carries out primary school interventions and is currently working with their Ministry of Education to incorporate financial literacy in the secondary school curriculum. They have already trained over 200 teachers to impart the financial material in schools. Other initiatives include addressing the needs of persons with disabilities, with documents converted to Braille and sign language in their television advertisements. The NFLP has also developed financial literacy training material relevant to small and micro entrepreneurs.
ECCB’s Financial Literacy Programme
The Eastern Caribbean Central Bank (ECCB) has been playing the lead role in promoting financial education in the Eastern Caribbean Currency Union (ECCU). This union comprises seven countries including Antigua & Barbuda, St Lucia, Montserrat and Dominica. According to the ECCB, “educating the public about financial and economic matters is key to supporting the bank’s stability, growth and development objectives.”
The ECCB education initiative includes offering ten-week savings and investment courses teaching topics such as budgeting, understanding loan documents, avoiding financial scams and understanding wills; after-work seminars, a monthly financial newsletter; schools programmes with presentations, competitions and mentorship components; radio programmes; and financial month activities held every year in October.
CARTAC Financially Fit Campaign
The Caribbean Regional Technical Assistance Centre (CARTAC), a regional resource which provides training and assistance in economic management for member countries, is funded by international agencies such as the Canadian International Development Agency (CIDA), the Inter-American Development Bank (IDB) and the International Monetary Fund (IMF).
CARTAC recently launched its financial literacy website www.financialliteracycaribbean.com, which is designed to educate readers on financial terms and pertinent information to help them to increase wealth and prepare for unforeseen situations. The website provides practical guidance on topics such as budgeting, saving, risks and returns of investments, and estate planning; and also offers resources to assist Central Banks and other regional financial supervisory agencies.
Given their current emphasis on achieving positive economic changes, it’s now the perfect time for our local financial authorities to join with the over 60 countries around the world which have developed structured programmes to educate their citizens about basic financial principles.
About the Author
Cherryl Hanson Simpson is a financial consultant and money coach, and founder of Financially S.M.A.R.T. Services. She is currently writing her first book, “The 3 Ms of Money: How to Manage, Multiply and Maintain Your Money.” Financially S.M.A.R.T. Services is Jamaica’s number one source for practical, down-to-earth and independent answers for all questions relating to personal finance. Get more smart money advice at www.financiallysmartonline.com and and www.financiallysmartadvice.com .
Copyright © 2010 Cherryl Hanson Simpson.