Talking to a colleague about Financial Literacy – we figured out how Financial Literacy is almost missing at schools and in most families money as a topic is not talked about. In schools children are learning the formulas for simple interest & compounding but not in the context of money and how it relates to their lives. At home on the other hand – we are keeping them away from the “money” discussions and all that the children see is that money comes from ATM and that you can buy what you want using a credit card. Maybe we are trying to insulate them now. But would we like them to falter on their way, like us, for many years making the same mistakes that we made before they understand “money matters”. Of course making them aware of basic concepts does not ensure that they will not over leverage themselves or not engage in impulsive purchases.

I was reviewing how Children’s Financial Literacy is being handled in other countries and I saw some good frameworks available in many countries which provide specific training at different age groups to improve financial literacy in children so that they can make informed financial decisions.

For example, the following an excerpt of what is the expectations from different age groups in Hongkong:

Age 6-8

  • Recognise notes and coins
  • Count Money
  • Need to save money
  • Differentiate between Needs and Wants

Age 9-11

  • Engage in cash settlement
  • Calculate discounts
  • Develop a plan for a short term goal

Age 12-14

  • Role of Banks
  • Simple and Compound Interest
  • Inflation and Time Value of Money
  • Borrowing
  • Investments and Risks

Age 15-17

  • Exchange rates
  • Taxation
  • Supply/ Demand
  • Good/ Bad Debt
  • Understand how credit card works

So what do you think? Would you have benefitted from Financial literacy earlier in your life or even now? Would you like to provide the same to your children? Please share your comments below.

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