The Japan Times
Schools ponder readiness in bid to improve financial literacy
Packed curricula and limited expertise may stall roll out efforts
Rather than building wealth by investing in risky assets, stashing hard-earned money into savings accounts has traditionally been considered a virtue in Japan.
That sentiment may serve as one explanation for the general lack of interest in investment or asset management among ordinary Japanese people, something that is well reflected in the fact that 54% of the more than ¥2 quadrillion ($15.48 trillion) in total household financial assets is concentrated in basic savings accounts or cash. Bonds, stocks and mutual funds accounted for just 16% as of December.
Lawmakers have long sought to change that mentality.
The government actually introduced a slogan of “from savings to investment” in 2001 to encourage people to invest, but the initiative has failed to make substantial progress over the past two decades.
Prime Minister Fumio Kishida recently announced a new economic policy, dubbed the “Doubling Asset-based Incomes Plan,” calling more than ¥1 quadrillion of household assets in savings and cash “a source of future potential.”
Kishida has not shared his specific methods for spurring investment, but one solution may lie in the classroom.
With the goal of improving financial literacy among students, Japan revised its national school curriculum guidelines to require high schoolers to learn more about personal finance starting this school year, which began in April.
Teachers and finance industry professionals agree that it’s critical to acquire knowledge of financial matters from an early age and are broadly supportive of the plan. But some home economics teachers are worried that they don’t have enough financial expertise to properly teach students, and classroom time is also limited due to a jam-packed curriculum.
What’s clear, however, is that the economic realities of the present day — rapidly rising inflation, for example, threatens to undermine the value of savings — have increased the impetus for improving financial literacy. One of the primary changes to the curriculum guidelines is that home economics teachers are now required to cover the pros and cons of stocks, bonds, investment trusts and private insurance products.
When interest rates were much higher decades ago, people could grow their assets by simply letting their money sit in savings accounts.
“But times have changed and people can’t count on interest now even if they put a large amount of money into savings,” said Tomomi Kuroda, a home economics teacher at Kohnodai High School in Chiba Prefecture.
“Like people in the U.S. and Europe, I believe we have to think of personal asset building other than just the savings option.”
Kuroda, who used to work at a major securities firm, said building assets through only savings accounts is not wrong, but she wants students to at least know that other options are available.
“If you don’t know (that there are such options), I think it’s a loss. I’d like them to know and then make their own choices,” Kuroda said.
Other teachers also said that improving students’ financial literacy is becoming more important, even if it bucks Japan’s traditional customs.
“I have been doing some research, but compared with overseas, it still seems kind of a taboo to touch on money in school or at home in Japan,” Misato Ishida, a home economics teacher at Saitama Prefectural Misatokita High School.
While finance has been largely absent from school education, some data indicates that most adults wish they were taught about personal finance when they were younger.
According to an online survey covering 600 people in their 20s to 50s last September by Matsui Securities, 81% of respondents said they were not confident in their knowledge of finance, while 71% said they wished they had learned about money in school.
Other developed countries have been putting more emphasis on financial education.
Personal finance is part of the national curriculum in England, where high school students learn about budgeting, financial products and services as well as risk management. Australia, meanwhile, launched a
National Financial Literacy Strategy in 2011 to promote financial education in elementary and high schools.
According to an education ministry official, the addition of financial education to Japan’s new school curriculum guidelines, which are revised nearly every decade, is not directly intended to accelerate the long-sought shift from savings to investment.
A key phrase in the guidelines says that financial literacy gives people the “power to live,” highlighting the ministry’s push to help people become more independent consumers who can better manage long-term financial planning, the official said.
The change also comes at a time when young people are increasingly worried about their future as Japanese society rapidly ages.
In 2019, a report compiled by a panel under the Financial Services Agency created a storm of controversy, as it noted that a couple who will each live to the age of 95 would need at least ¥20 million in assets, since solely relying on public pension benefits would not be enough to cover their living costs after retirement.
Then-Finance Minister Taro Aso refused to officially accept the report, as it diverged from the government’s stance that the public pension system is sufficient for people’s retirement savings.
Given concerns over the country’s aging population, teachers say that it’s understandable that the government is looking to promote investment by improving the financial literacy of teenagers.
However, “investment comes with risks, so we need to teach them risks as well,” Ishida noted.
Kuroda echoed that point and said, while some parents welcome the fact that schools are making more time for financial education, they want schools to teach both the merits and demerits of investing in an objective manner.
“I try to be really careful about not being biased, so I make sure to cover risks,” she said.