Question is how soon to give children financial literacy lessons
Children could easily pick up rudiments of financial life lessons
While the world has been busy compensating for the time lost due to the pandemic, many industries were rapidly adapting to new realities. Tech disruption has been a common thread across existing and emerging businesses, from ecommerce and logistics to sustainable finance and virtual assets. Blockchain has been a major tech disrupter, giving people and businesses much-needed monetary infrastructure that paved the way for them to keep up with mass digitisation. As far as budding entrepreneurs and aspiring investors from the Millennial and Gen Z generations are concerned, the proliferation of cryptocurrencies has been breaking down barriers to entry and contributing to the overall advancement of the financial inclusion agenda.
However, we cannot rest our case there. The era of pandemics and the 4th Industrial Revolution have awakened us to the need for taking personal finance into our own hands and adopting an active approach to investment. Financial education helps prevent fraud and leads to better decision-making, enabling people to evade financial risk, loss, exploitation and excessive debt.
Empowering youth on future of finance
While financial catalysts such as technology, innovation and digital solutions continue to gain momentum, personal finance education is falling behind. Financial literacy seems to be playing catch up with the fast-paced developments in the financial industry. We can no longer afford this reality, especially as we embark on a journey to prepare our youth for the financial markets of tomorrow.
According to the OECD, surveys show that young adults have some of the lowest levels of financial literacy. This is reflected in their inability to choose the right financial products and their lack of interest in undertaking sound financial planning. In the UAE, the Digital Lifestyle Report by the Telecommunications and Digital Government Regulatory Authority (TDRA) shows that over 11 per cent of the population is actively invested in digital assets, making educational resources on these concepts a much-needed requirement.
Children must develop the necessary skills that help them choose wisely from different career and education options, and enable them to manage any discretionary funds they may have — whether from allowances or part-time jobs. These skills will come in handy at a later stage in life, helping people manage their finances, utilise their savings and generate differentiated returns.
Role of the private sector
Although they are few and far between, some companies realised the importance of financial literacy long ago. Large enterprises and SMEs have a collective role to play in eradicating financial illiteracy. We are gearing up for the launch of the DIFX Academy, an online resource centre aimed at educating the masses on trading, financial strategies, digital assets, wealth management and portfolio diversification.
Digital — financial — divide
According to a study conducted by Google, Temasek and Bain & Company, over 60 per cent of adults in Southeast Asia are underbanked or unbanked. These challenges highlight the importance of initiatives such as Global Money Week, where children aged 13 to 15 and financial professionals convene to raise financial awareness. Low levels of financial competence have far-reaching consequences, both at micro and macro levels. People who are financially savvy tend to exert better control over their finances and make responsible choices when faced with everyday ‘spend, save or invest’ situations.