What should financial education be about?

Samira has been saving regularly over the years for her daughter’s education. Her sister, Bopha, calls her one evening – she has a cancer and not enough money to pay for the medical bills. Could Samira help her? 
Siven has bought new shoes, the cheapest possible. His sister, Samira, congratulates him for being so savvy with his money. If only Bopha could have been as savvy, controlled her expenses and saved…
Who is the most financially educated in this family? Samira and Siven may sound like an “obvious” answer. Let’s add one more piece to the story: Bopha has been working in a shoe factory for a decade. To keep costs as low as possible, the factory has not invested in new tanning machines that would reduce the workers’ exposure to carcinogenic chemicals, and has minimised payroll increase to remain competitive. So who is the most financially educated in this family? What is financial education about? Is it about reducing expenses and saving for the future? Is it about bringing the poorest in the mainstream financial system?
The OECD/INFE defines financial literacy as: “a combination of awareness, knowledge, skill, attitude and behaviour necessary to make sound financial decisions and ultimately achieve individual financial wellbeing.” But what if my financial decisions are “sound” to me, but “weak” for the people that they impact? What if my individual financial wellbeing results in another individual’s vulnerability, or cause tensions in my community? Why isn’t an overall financial wellbeing at society level not a goal as well?
All these questions have been increasingly nagging us since the start of a+b=3 ten years ago, in November 2005. The more we taught, the more we learned and gradually our curriculum has been more nuanced, focused more on how money is interwoven in the relations between people, and on our responsibility. Over the ten years, several countries have raised financial education as national priorities (including the USA where the 2008 financial crisis began); the OECD has tried to measure financial literacy worldwide. But what has really changed? Inequalities have risen, corruption undermines development and has more negative impact on “individual financial wellbeing” than the lack of financial literacy, and over-indebtedness is endemic, shifting millions of dollars from the borrowers to the lenders through interest-bearing loans.
In a world that we keep being presented as “interconnected”, why doesn’t financial literacy focus on these interconnections and give us the awareness, knowledge, skill, attitude and behaviour to take more mindful decisions? To reduce the inequality gap? To address the ethical asymmetry we often fall into – where I take decisions for my money… that I would not take if it was someone else’s money. In a world where real and financial products are excessively complex, most of our decisions are partly or mostly blind: we have no idea how buying a tomato impacts the worker who picked it up, we have no idea how investing in a retirement fund impacts the environment or contributes to mistreating the animals we consume. Price tags don’t tell us the stories behind. What if financial education gave us the awareness, knowledge, skill, attitude and behaviour to have a more critical reading of price tags? Our purchasing power and our savings ability can sometimes have a deeper impact than casting a ballot. Shouldn’t honesty and fairness be on top of financial education and taught through practical cases at school? And this last question has been nagging us even more than other questions: who needs more financial education: the poorest or the wealthiest?
Reflect further by watching the “Finance in pictures” videos.
Try our financial education quiz and find out how you are scoring!

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