In many countries around the world, children's right to pocket money is enshrined in law
Over the past two years, Germany and the Czech Republic have made particular progress in children's financial literacy. The Netherlands, Sweden, France and some other EU countries are hastily introducing a new subject. Starting next year, lessons in "money management" will become compulsory in schools in Great Britain, where a national program has been developed covering even kindergartens. Why does Europe need all this?
Learning is light
Launching the project, the European Commission defined its ultimate goal as follows: "to develop the ability of consumers and small business owners to understand the essence of a financial product and make qualified, well-considered decisions." Those who do not possess this ability will not be able to adapt to life in the next five to ten years.
According to economists, "tightening belts" is a long-term trend for the EU. Social programs supporting youth will also fall victim to it. Unemployment forecasts are bleak. The future of many current first-graders does not promise to be rosy – due to more frequent bankruptcies and staff reductions, they will be forced to live on their own savings for long periods and manage their financial affairs independently.
In addition, experts predict that for small businesses, hiring an accountant will become a great luxury. That means entrepreneurs will have to do their own financial accounting. Moreover, financial products themselves are becoming increasingly complex. And then there are pension savings, the management of which many EU countries have shifted onto the shoulders of their citizens...
Interestingly, all these arguments had such an effect on the Czech Ministry of Education that it created standards for financial literacy in record time – a set of basic concepts that any elementary school student should understand. The authors of the first textbooks were Eva and Michal Skoržepov: first they wrote a manual for secondary school, and then for the youngest.
It is assumed that children should be able to easily handle a bank card, open and close accounts, and competently monitor them... But of course, the days of the beloved piggy banks are long gone, and now it is customary to put money in the bank. And so that your personal tree with gold coins, like on the cover of the financial literacy textbook, does not remain without golden leaves, be sure to water it, that is, regularly deposit money into the account.
The youngest are told fairy tales in class. Like, once upon a time there was a boy who constantly withdrew money from an ATM and spent it on candy. One fine day, all the money ran out, and the sweet-toothed boy never replenished his supplies. Meanwhile, the boy's mother fell ill. And when money was needed for medicine, the account turned out to be empty. The boy was very upset, but could not help. Moral: if you withdraw something, immediately put it back. And if you can't replenish it, don't spend it.
In class, it is analyzed in detail how much a young depositor can put into an account and how much they are allowed to spend so as not to end up with empty pockets. Not every adult knows that at least a tenth of earnings should be saved, and now this wisdom is taught from a young age. By the way, European children have something to save – in many countries, their right to pocket money is enshrined in law.
Pocket income
13-year-old Dominika, an eighth-grader in the small town of Hrádek, has modest income. She receives 300 crowns (about 12 euros) per month from her parents, and the other students in her class get about the same. Dominika has regular expenses, such as paying for her mobile phone. There are also "super earnings" when Dominika looks after her little niece and gets paid by the hour from her grandfather. She has a long-term plan – to earn money for a laptop, so she saves a lot and does not lend money to anyone. She has already mastered the logic of income, expenses, and saving. But not everyone is that conscientious!
Dominika's classmate Michal has his own credit card, but does not know how much money he has in his account. His friend Jakub receives money from his parents whenever he wants, so he has no regular pocket money. Eva gets paid for each page in her diary without Cs, and Natasha gets twenty crowns for taking out the trash.
The sources of income of today's schoolchildren, as we see, are quite different. However, they have to learn to manage them together. They are divided into four "families" that plan both their spending and their income. The family of entrepreneur Vezenchik is on the verge of bankruptcy, while the Groshikov family, whose grandparents actively play the sports lottery, won 10 million crowns (400 thousand euros). Accordingly, the winners decide how to use the money: how much to put into an account, how much to buy shares, and how much can be invested in the household immediately – for example, to renovate the house.
In virtual families, children decide whether they can afford to go on a seaside vacation or will have to stay at the dacha. Where it is more profitable to buy groceries: near home, where everything is a bit more expensive, or at a hypermarket 15 kilometers away. How often to restock the refrigerator and what exactly to buy so that nothing goes to waste. Children write their simple weekly budgets, deciding how much to put in the "Ice cream" line and how much in "Mobile communication."
By the way, as both children and their parents note, the subject turned out to be useful for everyone – adults and children suddenly began to understand each other better. "Sometimes mom and dad simply underestimate the role of pocket money: even modest amounts help our children learn to handle money," says Eva Skoržepova, author of the financial literacy textbook.
By the way, Eva urges parents to be vigilant – in Czech Republic, banks issue credit cards to children as young as 8 years old (in Poland, for example, only at 13). When receiving a bank card, a child is given a Lego set or a plush toy so that they will remember the 'kind bank' for a long time. Thus, money from the ATM is obtained playfully. From age 15, in some banks a child can get a card that can be used to pay online. It is clear that without basic knowledge of all this credit and monetary wisdom, one can get badly burned. Parents will have to deal with the consequences...
The European program looks very tempting. Although there is one problem – not only parents, but also the teachers themselves are still unfamiliar with financial literacy. Aneta Čadová, a teacher of the new course, by education a chemist and biologist, became interested in money only when she was offered to teach financial literacy. Before that, all money matters in the family were handled by her husband. Teacher training is conducted at special seminars – university pedagogical faculties do not prepare such teachers. 'Some teachers, especially in secondary school, are quite prepared. But there are also those who quietly came up to me during breaks and asked: "I don't understand what is the difference between credit and debt,"' recalls textbook author Michal Skoržepa.
Interestingly, European schools literally embraced the new subject with open arms. And, to be honest, not only because they care about the financial literacy of their students. The EU, through national ministries of education, allocates considerable funds for the introduction of this subject. Until December 2012, within the framework of the project, only in the Czech Republic about 200 million euros could be spent. The sums are not that small – a modest provincial school with a budget of 20 million crowns (about 800 thousand euros per year) can receive an additional one and a half million crowns (about 60 thousand euros) from the EU to launch the new subject.
Most projects are funded by banks interested in future customers. For example, ČSOB supports so-called financial olympiads – interschool competitions in financial literacy, and GE Money Bank finances the project 'Understanding Money' (teacher training).
In other countries
In Russian schools, there is no talk of such a subject yet. Although not long ago the state said that it is necessary to totally increase the financial literacy of the population. However, it is much harder to teach adults than children. To be fair, it must be said that as an experiment, economics has been introduced in some schools, and it is taught in a game form already in the first grade. Interestingly, the experience is recognized as successful, but, as often happens, it did not receive widespread development.
In the USA, financial literacy has been taught for decades, but there is no single state program in secondary school, since in each state it is decided by local administration. As Neil Godfrey, a successful financier and now author of the website CFN (Children Finantial Network), notes, before the crisis most American children were financially illiterate.
For example, a study was conducted in which out of 4000 students starting college, about 70% failed on basic questions about finances. At the same time, American teenagers never spared on spending. For instance, in 2001, teenagers spent 175 billion dollars. Moreover, they did not think at all that with the saved money they could study in college. Those who got into college are offered three bank cards that must be kept until the end of their studies, i.e., carry out transactions on them. At the same time, many managed to get into debt so much that completing college became problematic.
Godfrey notes that even minimal financial education (about 10 hours of lectures) would help improve the situation. And books like 'Money Doesn't Grow on Trees: A Guide for Parents Who Want to Raise Financially Responsible Teenagers' – are not uncommon in the USA.
In the UK, where financial management has been optional until now, from 2011 the subject 'Personal Money' will become compulsory in state schools. From ages 7 to 11, students will learn personal accounts. From 11 to 14, the curriculum includes learning about credit and debit cards, loans, credits, basics of household economics. In addition to state support, many banks run their own programs independently and intend to invest increasing amounts in this.
In Australia, financial education in schools has not had state support until recently. However, national standards are now being introduced, starting from preschool institutions. Here the main emphasis is on consumer rights and responsibilities – students are taught to defend their rights in all institutions where they pay money. In Australia, they like to repeat: 'Understanding money is profitable.'
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