Investing in financial literacy of youth today for sustainable financial inclusion tomorrow

Ever wondered why more than 80 countries worldwide have dedicated national programs to enhance financial literacy for children and youth? And why National Strategies for Financial Education all around the world identify youth as one of the main target groups for their coordinated approach to enhance financial capability of the populations? Read on for…s.

Evidence shows that financial behavior is formed around the age of seven suggesting that financial education should start young. Children’s feelings about spending and saving can be measured from an early age and related to their behavior with money that will most likely influence their financial behavior as adults as well. The future of financial inclusion therefore, lies in the hands of children and youth.

A study by Ashby, Schoon and Webley suggests that saving at age of 16 is linked to saving at the age of 34; young people who start with a savings account during adolescence are more likely to have a savings account and save more up till adulthood. Examining the cross-country historical evidence of public policies to promote the act of saving, shows that countries that fostered saving habits among children in the past, tend to display a higher savings rate in recent years. (Garon 2013)

Why invest in financial literacy for youths

Imagine delivering financial literacy to a class of 30 children. You would need a trained teacher, a school, a few hours for the lessons and maybe some materials. Now imagine doing the same with 30 rural entrepreneurs, dispersed across a whole province, all of whom have different schedules, and maybe even an unpleasant experience with the formal financial sector. Which would have a stronger impact in the long term: reaching children or rural entrepreneurs? The answer: Reaching children in schools is more accessible and cost-effective than other target population, thus leading to a stronger impact in the long term.

However, there are challenges. Getting into schools may sometimes be more difficult than others because of special permissions needed or an overloaded school curriculum — or even due to financial pre-concepts that teachers and parents collectively share from their personal life experiences.