Integrating Personal Finance Management into our schools curriculum
From executive meetings in corporate boardrooms to family discussions around rural kitchen fireplaces, the gradual switch from our usual subsistence to cash economy has triggered new concerns for better knowledge and understanding of this new tool-MONEY.
Just as we know how to effectively sharpen our axes and bush knives for our subsistence gardening, we also need to sharpen our knowledge on some of the core principles of handling our personal finance (money), such as setting financial goals, budgeting, investing and savings.
Not only that, the increasing costs of living and uncertainties of regular or foreseen income and quest for financial safety has developed the need to reconsider slipping this subject into our schools curriculum.
As well as that, it also ensures that this foundation is laid early into the lives of our young generations. In this brief, we will provoke understanding on what is financial education and how it will help our country.
Also, we will be updated with current commitments taken by our National Government, Central Bank and other key stakeholders in integrating financial education into our schools curricular and finally to share some of the benefits that our country will be getting out of this commitment.
So what is Financial Education?
Amongst other definition, the comprehensive one is given by Organisation for Economic Cooperation and Development (OECD), they defined financial education as, “the process by which financial consumers/investors improve their understanding of financial products and concepts and, through information, instruction and/or objective advice, develop the skills and confidence to become more aware of financial risks and opportunities , to make informed choices, to know where to go for help, and to take other effective actions to improve their financial well- being and protection.”
Thus, providing information means presenting facts, data and specific financial knowledge to all of us and especially to the under-served population with the view to raise awareness of the choice possibilities of services and products offered by banks and other financial service providers and the likely outcome/results.
Why do we need financial education?
According to a recent survey on national financial competency carried out by Pacific Financial Inclusion Programme (PFIP) and Central Bank, the results indicated that a significant portion of our population and especially those in the rural areas have none or very little knowledge and understanding on how to save, spend and invest money and to understand products and services that money can or cannot do.
Additionally, it has also revealed that less people are actually using the financial services and products that available with the banks and other financial institutions compare to the rest of the Pacific Islands.
This study reflects the real situation on ground that needs our combine effort in raising the level of our peoples’ understanding and knowledge with the access and usage of financial services and products, in which financial education is aiming to achieve.
Also we need financial education to assist us in making financial decisions for our future wellbeing amidst the growing tide of marketing and competitions, more over to protect us over/on the continuous changing and sophistication of financial markets and products.
Take for example, banking services and products are moving away from the brick and mortar (physical building and tellers) to electronic and now mobile phone banking.
Who involves in promoting Financial Education in Solomon Islands?
Financial education was a Pacific-wide initiative endorsed by the Forum Education Minister’s Meeting in March 2009 in Nuku’alofa, Tonga.
This was further captured in the Money Pacific Goals 2020 fully endorsed by six Pacific countries as part of the 2009 South Pacific Central Bank Governors Meeting lead action resolutions, now known as the ‘The Money Pacific Goals 2020’.
One of the four Money Pacific Goals specifically noted that “All school children to receive Financial Education through core curricula.”
This commitment has driven Central Bank at the forefront; it has in February 2011 set up a National Inclusion Taskforce (NFIT) to coordinate amongst other financial inclusion activities the integration of financial education into our schools.
Today, after careful study visits to regional counterparts by key stakeholders and a scoping mission to identify avenues for integration, we are happy to report that through our partnership with Curriculum Division through the Ministry of Education and Human Resources Development (CDD-MEHRD) and its relevant stakeholders; we are breaking barriers in actually completing feasibility studies and now moving into integrating FE materials into our syllabuses.
During the second part of this year and onwards we are anticipating a lot of concentration on preparations of education and teaching materials and training of teachers.
These tasks will be carried out mostly by our CDD-MEHRD together with their key stakeholders especially School of Education at our National University.
This is indeed a great achievement in fulfilling this vital commitment. Subject areas in which Financial Education would be integrated include; Mathematics, English, Social Studies, Science and Agriculture for Primary level and extending to Business studies and Home Economics for the Secondary level.
The level of integration would be from year 1 to year 9 in both primary and secondary education.
Stakeholders are expecting the full roll out of this integration of financial education into our year 1 to year 9 before 2020.
How will Financial Education benefit Solomon Islands?
Financial education once integrated into our schools and learned at an early stage is laying a strong foundation for a better individual and society, now being seen equal to basic education which is a public good, it can generate a ‘win-win’ situation for all parties.
For individuals, it means greater confidence in making financial decisions and improved financial situations.
For example, John being educated with money concepts at primary and secondary school level is now able to raise money, do his budget and understand how to save money with banks, can use his mobile phone to send or save money rather than visiting bank branches which might cost him money or time out of school.
It will also benefit financial industry and financial markets; by the higher level of financial literacy it increases the demand for financial products and services and reduces information asymmetries (where one party has more or better information than the other on the required financial transaction, products and services).
A classical example, a lot of Solomon Islanders are taking up credits (loans) without better understanding the obligations, costs and benefits involved, hence credit providers are thriving on these limitations.
For the government, it means higher or greater private saving rates, which might help reduce risk of public expenditure pressures and encourages high involvement in sound economic activities.
In general high level of financial knowledge will generally contribute to economic stability and development.
So how can we improve on our national status of financial literacy? One of the answers is the current initiative to integrate financial education into our schools.
We all need to increase our effort in supporting the Curriculum Development Division through the MEHRD and our Central Bank to see that this project is launched on time. Let us hope for a more financially literate and competent Solomon Islands by year 2020.
National Financial Inclusion Unit
Central Bank of Solomon Islands