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Opinion 04 November 2019

Financial Literacy for All

Financial literacy is essential to improve the quality of life for individuals and society as a whole, and to promote their active participation in financial aspects of life. The goal of financial literacy is to build the knowledge and skills that are needed to understand basic financial concepts, recognize financial risks and instill the motivation and confidence to make sound decisions in a variety of situations.

Financial literacy requires both knowledge and strong decision-making skills, both of which also bolster individuals’ overall well-being. It is safe to say that when people acquire financial literacy, it vastly improves their quality of life and the quality of life in society in general.

We will now explore the concept of financial literacy.

Financial literacy worldwide

The everyday challenges of the 21st Century require a new set of skills that vary substantially from those needed in past centuries. Financial literacy is one of those skills.

Human beings now live much longer than they did in the past, and natural resources are limited for the growing global population. It is also essential to raise awareness of the importance of saving financial resources, similar to other resources, and take precautions to ensure sufficient financial resources are available in the future.

In addition, financial literacy is a skill that directly relates to the United Nations (UN) Sustainable Development Goals (SDGs), specifically goal 1 “no poverty” and goal 8 “decent work and economic growth”. In Turkey, 2018 research by the OECD’s Programme for the International Assessment of Adult Competencies (PIAAC) found that Turkey had the lowest financial education scores, together with Chile, Israel, Spain and the U.K., out of 31 countries.

Financial literacy in daily life

Financial literacy is a regular part of everyday life. Things like doing simple price calculations when shopping, doing online transfers, using ATMs, checking currency exchange rates, following the evolution of interest rates, making income and expense charts (which are available on many financial apps), managing bank accounts and deposits, prioritizing expenditures, saving money for hard times, using credit cards consciously, managing a monthly budget, being familiar with tax rates and alternative ways to use money are all basic needs for everyone. Retirees should be especially conscientious to ensure they have sufficient savings to cover future medical and healthcare needs that may arise.

Younger generations need to understand basic financial principles and practices in order to make complex financial decisions on their own.

Human beings learn by observing their parents and their environment. It is therefore essential that beneficial behaviors and attitudes are acquired at a young age. Once young people become adults, they will start using financial products and services as citizens, consumers, employees and possibly even employers. If they were not properly introduced to financial concepts by their parents, it is easy for them to get confused. Younger generations need to understand basic financial principles and practices in order to make complex financial decisions on their own. They should make conscious, well-informed plans for the income they earn while while young and healthy, but also analyze their financial resources to determine what resources they can use as they age, with an awareness of the options that lie ahead. 

Financial literacy in the education field

An international agreement hasn’t been reached on the curriculum to teach financial literacy to children and youth. Pioneer countries that prioritize financial education have integrated it into various school subjects in order to offer related examples. For example, critical thinking and some financial concepts are introduced by asking questions about real life examples in math classes. Instead of integrating financial education in school subjects, some countries offer it as an extracurricular activity.

Government agencies and NGOs also offer programs to raise awareness of financial literacy and build financial skills in children, youth and adults.  They also provide training sessions and mentorship programs for teachers, which cover financial skills, methods and tools.  For example, the Teachers’ Academy Foundation offers a program called ‘5 Pebbles Social and Financial Leadership Education’, which is sponsored by Garanti BBVA. The program supports teachers by teaching them financial literacy skills that they can transfer to their students, furthering their overall development and well-being.

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