It does not matter whether you have basic or higher education, whether you have a good job or not. Nor does your age, your level of education, or whether you are a man or a woman. If you do not plan your spending, save from the moment you start earning an income, spend less than you earn, and manage your accounts yourself, you will not be free to make your own decisions and you will live at the mercy of whatever unexpected events arise. We all need to know how to manage our money, or we will not be able to have a stable life that allows us to focus on pursuing our dreams, whatever they may be. And it is never too early to start acquiring this basic financial knowledge.
Adults’ financial habits and responsible spending patterns are established from the age of seven, according to a study by the UK Government’s Money Advice Service and behavioural experts at the University of Cambridge. It does not seem an unreasonable conclusion if we consider that today’s children—the touch generation—start using tablets before they learn to walk and, in some cases, learn English at nursery.
The problem is that in Spain we are not taught these very important things at school: not in primary education, not in secondary education, not in vocational training, and not in upper secondary education either. If we are lucky, children may pick up some concepts in the fourth year of compulsory secondary education. But only if their school offers economics as an optional subject and they have chosen the social sciences or humanities track in upper secondary education. In other words, it is unlikely.
Parents today do not do it well either. Our children and young people receive their allowance or money for expenses “without instructions for use”. I do not know whether it is out of embarrassment, laziness, or simply because we assume children will learn on their own “when they find out what life is really like”, but in most households there is no discussion about how money should be managed. And it is a serious mistake not to do so, because children will learn through unpleasant experiences and, in many cases, to get out of a tight spot they will have to rely on our financial capacity as parents, at a time when we should already be planning our retirement.
This issue has already reached financial authorities such as the European Banking Authority (EBA). This body has just published its first report on financial education, which includes more than 80 initiatives carried out by the national authorities that supervise banking products and services in the EU’s 28 Member States. The EBA has produced this report because it understands that financial education is essential to help consumers improve their financial well-being and their understanding of products.
The EBA is not the only case. In its January report, the European Commission’s High-Level Expert Group on Sustainable Finance adds a new dimension to the issue and highlights citizens’ lack of financial literacy as one of the major barriers preventing them from choosing the financial products and services that best suit their needs. Greater financial education, it adds, would increase demand for sustainable or environmentally friendly financial products.
The European Banking Federation (EBF) is also aware of the need to promote financial education in society. Once again, this week it is holding European Money Week, an initiative in which the banking associations of 29 countries and their partner banks take part, launching numerous programmes aimed at providing citizens with the knowledge they need to better manage their personal finances. In this context, the Spanish Banking Association is launching the fourth edition of “Your Finances, Your Future”, thanks to 500 volunteers from 22 institutions who will visit schools across Spain to help children develop responsible consumer financial habits and understand basic cybersecurity concepts.
The financial sector, the Bank of Spain and the CNMV, as promoters of the National Financial Education Plan, and the various international authorities are working together to address the worrying lack of financial literacy in Spain. However, the involvement of the education sector and families is essential: parents, schools and teachers. They are the drivers of change, the basic ingredient without which it will not be possible to remedy such widespread lack of knowledge. Would it not be wonderful if, in addition to English and using a tablet, our children learned to manage their money? Parents, of course, would enjoy our well-deserved retirement even more.
Beatriz Morilla, Chair of the Financial Education Committee of the European Banking Federation
