Recently I wrote an opinion piece for Unlimited magazine, extolling the benefits of more financial literacy education for students. I’ve copied the full text of the article below for those who want to read it. The other day I received a great email from someone who had read the article, it really made me feel good about the stuff I’m doing and was a real validation that I’m on the right track. The writer said;

Hi Ben

Someone just forwarded to me your article regarding the above and I just wanted to endorse your thoughts.

As a mother of 3 young kids struggling to make ends meet, I realise now more than ever our kids need to understand the value and potential of a dollar. As I look at returning to a changed workforce I wonder where best I can re-educate and re-enter to the shared benefit of my 3 future entrepreneurs.

I’m starting to wonder if they would benefit from me re-skilling in a financial direction in order to instill more economics into them and their lives as opposed to merely taking an admin position to pay the bills.

We currently invest in extra maths tuition to help our 9yr old but already I can see it’s not going to be enough to really advantage her in this modern world, and then their IT education is probably lacking too.

WOW what a wake up call, thanks for bringing our attention to this.

I browsed your diversity website and saw you live on a farm, sounds like a nice balance you’ve achieved!

It’s awesome to see parents thinking about these issues, I replied to the sender and told her that she was already over half way there given the obvious thought and attention she’s giving to the future of her kids.

Anyway – here’s the article in full for those who are interested;

The seemingly never-ending succession of finance company failures, along with high levels of personal borrowing and credit card debt, and lack of savings has made me wonder about the understanding our citizens have of financial realities.

In days gone past schoolchildren learnt home economics, some basic economic and accounting skills and other lessons that would help them run their home and family finances later in life. Sure, at the same time we embraced corporal punishment and dodgy private schoolteachers, so not everything was better ‘way back when’.

This basic financial education has gone; now it’s deemed more important to teach students graphic design, barista skills and txt wrtng. I can’t help but think something has been lost in this change, and that the current dire financial situation of a number of people is a consequence.

The last few decades have seen a rapidly expanding availability of electronic goods, cheap cars and other consumer items. Concurrently, with the introduction of credit cards and widely available personal finance, the lack of sufficient money to purchase an item is no longer an impediment to obtaining what you want, when you want it. These two factors together are dangerous enough, but coupled with the lowering financial and economic literacy in our young people, the result is a potential fiscal catastrophe. Student loans — interest free or not — are just another potential problem in the mix.

We need to rebuild the financial literacy of our nation, and the obvious place for this to start is in schools. Currently government agencies such as New Zealand Trade and Enterprise fund the hugely worthwhile Enterprise Training Programme run by providers nationwide. At the same time, substantial funds are put into programmes to increase exports, further cutting-edge design and incubate knowledge-wave businesses. My contention is that without the foundation of financial literacy these initiatives are, at best, less effective, and at worst doomed to collective failure.

The Ministry of Education needs to sit down with business educators and develop a programme of instruction for lower- and middle-school pupils to give them some financial literacy skills. Why start so young? One only need visit an intermediate school and see the number of pupils with cellphones to see that younger and younger children have access to consumer goods. They do not, however, have the knowledge and skills to understand the financial impacts of their conspicuous consumption.

Currently there are programmes in place to teach youngsters enterprise skills — novel initiatives where school pupils set up mock businesses and try to get them up and running and profitable. These programmes are commendable and a fantastic introduction for students to the world of commerce. However these programmes would be even more effective if built on a foundation of financial literacy. This foundation, as I have stated, should be built from an early age in order to imprint financial realities into students’ thinking as they move onto more complex subjects.

Any financial literacy programme has to be relevant to a modern world. We could try to bring back piggy banks but the rules of old are gone: we live in a society built on credit, based on consumption and based on rapid change. Our teaching of these financial skills needs to be sympathetic to, and relevant for, the world we live in. We need to teach young people that debt is good but debt incurred on a depreciating asset is potentially bad. We need to give them the skills to make judgement calls about when debt is good and when it is bad. We need to show them the rule of old of not buying an item until it can be paid for in cash is no longer relevant, but running up too much credit you can’t pay back is also not a good thing. We need to give them the analytical skills to make a determination as to what is expenditure with a plan and what is unnecessary consumption — plain and simple.

In short, and to borrow a line from Tony Blair, we need to find a Third Way towards upskilling our young people in financial realities. We may still alienate those bought up in less frivolous times and we may reduce some of the exuberance of our modern age but hopefully we will find a middle ground that allows us to profit from the benefits of a dynamic world, while negotiating around some of its more dramatic pitfalls. And remember, these schoolchildren will be tomorrow’s business owners and executives.

Ben Kepes

Ben Kepes is a technology evangelist, an investor, a commentator and a business adviser. Ben covers the convergence of technology, mobile, ubiquity and agility, all enabled by the Cloud. His areas of interest extend to enterprise software, software integration, financial/accounting software, platforms and infrastructure as well as articulating technology simply for everyday users.

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