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Analysis and opinion 10 Apr 2019

Closing in on a new financial education

In an article published a few months ago in’The New Yorker‘ the British writer John Lanchester explains that in order to write a novel about London, he had to begin by trying to understand “the world of money.” Although Lanchester isn’t shy on culture – he grew up between Calcutta, Brunei, and Hong Kong; and was educated at Oxford – his reading about the economy required something of an effort.

A lot of professionals, myself included, have to brush up on their knowledge of the financial universe. Even more so as current changes provide us more flexible and varied uses of money. It is an established reinvention, and so frequent and so constant that perhaps it makes us lose perspective. The lessons we learned about the economic landscape are not necessarily the same for younger generations. And this interferes with our perception about what children and young people need. Financial education needs to be taught at school but perhaps it needs to be different to what previous generations needed.

The digital magazine, Rave, has a graphic that features some of the attitudes of Generation Z (Gen Zers) toward the economy. The majority of Gen Zers believe college should prepare them for their career. And for the most part they prefer not take on too much debt to finance their future university education. They are pragmatic and are inclined towards flexible or freelance jobs that will allow them to enjoy their lives. Some of them, like Greta Thunberg, are able to skip classes in order to demand that global leaders take real action against climate change.

More graphics, this time from ‘Vision Critical‘ reveal new traits that define the young people who were born at the end of the last century: they have blatantly different consumption habits than millennials; good products are more highly valued than experiences; they are interested in psychology and in human relationships; they are entrepreneurial and aware of their rights as users and customers.

The younger generation also has a different view of the economy. The economy is inherently tied to one’s private life. Traditional explanations about the industrial revolution and Utopian essays from the 20th century no longer suffice. This generation is exceedingly pragmatic and distrusts traditional theories to explain the new pulse of the economy. Nor are they satisfied with schooling that only helps them file their taxes, prepares them to use a credit card, or explains the different kinds of mortgages. Many of them sense that these tools will be obsolete in a few year’s time.

Digital outlets have more influence than family over a child’s professional dreams

Young people are also interested in the relationship between the economy and the environment. They want to simplify processes and are not afraid of the role robots will play in society’s future. Many are self-taught in a number of fields, and they are participating in the creation of new professions. In its Imagination Report the leading online magazine for dads, Fatherly, reveals the professional aspirations for many North American children. One of the interesting points is that digital outlets have more influence than family over a child’s professional dreams.

In 2016, Alex Williams and Nick Srniecek proposed a new economic framework in ‘Inventing the Future. Postcapitalism and a World Without Work‘. The authors question the idea of industrial work applied to the current point in time, traditional political models, and outdated theoretical frameworks given global financial synchronization. They propose a single post-capitalist salary, liberating humanity from work, a concept that depends on robots and machine learning. Whether we agree with them or not, it is more than certain that the future will be different from what we imagine.

If in the last century an understanding of the economy was the key to development – though still a subject lacking its rightful place in the classroom – today an understanding of the economy has to be all-encompassing.  As the British analyst Chris Skinner says, “each evolution of humankind creates a revolution in monetary and value exchange. That is why it is important to reflect on the past to understand the present and forecast the future.” Forums for debate play an important role in this.

Skinner has reflected on the future of finance and the role of money in the ancient world. He has adopted William Somerset Maugham’s phrase: “Money is like a sixth sense without which you cannot make a complete use of the other five.” The author points out that understanding the role of money in historical and social processes is important in order to be able to address phenomenon like bitcoin and the network effect in transactions of the future.

“Money is like a sixth sense without which you cannot make a complete use of the other five”

This implies having theoretical frameworks that explain curious relationships. The stoicism exhibited by many in the Silicon Valley business elite, for example. Once again, ethics must go hand in hand with financial training.

Along these lines, to allow young people to overcome obstacles or deal with changes to be confronted, a revisit of some basic concepts is required. Some definitions are fundamental for a basic economic education, but also for a holistic view of history. The definition of money, work, happiness, well-being, health, and ecology should be included in an explanation of how the economy works and the use of modern-day financial tools. For example, knowing the carbon footprint we leave behind when we commute could be a baseline used by future businesses when they are drawing up commuting strategies.

It is also incredibly useful to appreciate the paradoxical relationship between money and happiness. Recently the YouTuber, Casey Neistat discussed two types of problems: those that are financial and those related to the essence of living; these two threads don’t necessarily cross. In the video, he mentions an interesting New York Times article, ‘Wealthy, Successful, and Miserable.

A financial education plan has to include all the elements that come into play in the education of the future. Healthy ecosystems, digital work, responsible eating, gender equality, inclusion, and coexistence with robots. This is how we will be able to take the future by storm, and not the other way around.

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