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Fighting decline in financial literacy

Pocket Change BDA: Shantel DeShield is helping young people to become money smart

In 1737, Benjamin Franklin wrote a column entitled, “Hints for those who would be rich”, noting that a penny saved is two pence clear – possibly a first look at asset appreciation.

Fast forward to 1849, when financial literacy was still an informal concept, and when James Gilbert, a manager for London and County Bank, published “Ten Minutes’ Advice about Keeping a Banker”, detailing the advantages of opening a bank account by educating the public about banking (not just for the rich) and its benefits.

The Smith-Lever Act 1914 created university research programmes to inform the public about personal finance and related matters.

In 1972, the non-profit National Endowment for Financial Education came into being in the US, its goal to empower financial decision-making at all stages of life.

It was followed in 1993 by the Jumps$tart Coalition, Advancing Financial Literacy for Students, a US national non-profit coalition of more than 100 organisations from business, finance, academia, education, government and other sectors, as well as a network of 51 state affiliates, which share a commitment to “financial smarts for students”.

In 1997, the United States Jump$Start Coalition presented results of their survey testing 1,532 high school seniors from across the United States on their knowledge of personal finance basics: taxes, retirement, insurance, credit use, inflation and budgeting.

The students correctly answered only 57.3 per cent of the 31 multiple choice questions, with just 10.2 per cent of the students scoring a "C" or better.

The study also showed that US states with high numbers of adults declaring personal bankruptcy had high numbers of 12th graders who were personally finance illiterate.

Fifteen years later, 2012, the first OECD PISA Programme for International Student assessment of 15-year-olds in 18 countries and economies took part in the test, which assessed the knowledge and skills of teenagers in dealing with financial issues, such as understanding a bank statement, the long-term cost of a loan or knowing how insurance works.

The results found that many young people are confused by money matters.

Around one in seven students were unable to make even simple decisions about everyday spending, and only one in ten could solve complex financial tasks.

Across the spectrum, adult test results of finance knowledge are not much better.

Factually, financial literacy scores for both students and adults have declined steadily for decades.

Yet, the percentage of people who believed they were above average in financial literacy – but actually scored lower than average on the test – increased from about 15 per cent in 2009 to nearly 21 per cent in 2018.

My opinion as a qualified financial professional with more than 37 years of experience absolutely agrees with the stated decline.

In our digital age where easy credit exists, following social media investors appears to be the get-rich answer, influencers tout looking-great, living fabulous lifestyles (and being paid bundles for their opinions), all promoted without any consideration of how, where, when, and what thinking goes into being financially secure. The allure of following the crowd overwhelms common-sense money management instincts.

The result:

• Less ability to achieve financial security

• More susceptibility to financial fraud

• Troubled finances in personal relationships

• Living on the edge, personal bankruptcy

• The risk of falling permanently into the government financial assistance safety net.

The urgency is now

Countries, states, local education institutions – from elementary to university levels – are moving to establish core financial literacy curriculum (or have already implemented such) as requirements for graduation.

So, readers, you have read and heard me focusing (harping) on my financial literacy mission for more than two decades as well.

Bermuda has yet to encompass this vital financial impetus for all students on a broad, legislated educational scale.

However, there are some focused organisations and individuals who have started to initiate change.

Today, we recognise one of them.

Is it better to look rich, or be rich?

Shantel DeShield, a professional educator for more than 15 years, is a Berkeley Institute graduate with university and postgraduate degrees who single-handedly took up the Bermuda youth financial literacy education challenge.

I first met Shantel and her personal mission for Bermuda youth when she was featured three years ago in a Royal Gazette Lifestyle article, “Teaching youngsters the financial basics”.

Working with young adults, she noted that their concepts regarding money and wealth were reflecting prevailing social attitudes, defining success by what they own: expensive smart phones, jewellery, and brand name accessories.

She would often ask them: “Is it better to look rich or be rich?”

Shantel learnt from her own experience with “wanting to look like she had arrived”. Returning home after college, the first thing she did was buy a new “red” car, with an interest-bearing loan. She wished she had bought a cheaper option, eventually, selling it. Her replacement was a $2,000 second-hand car.

She noted that young people had not yet understood the satisfaction of delayed gratification, saving first – having your money earn more money before you spend, using money to create opportunities, understanding 21st-century financial matters, all keys to financial freedom.

On her own initiative, she founded Pocket Change BDA, a social enterprise dedicated to teaching 21st-century financial literacy to children and teens, aged 5 to 18, by promoting financial freedom and generational wealth.

Pocket Change BDA is involved in seminars, workshops, presentations, camps for children, interactive games and learning content, financial literacy products and vocabulary flash cards, available at Bookmart.

You can find Pocket Change BDA on Facebook or contact her at pocketchangebda@gmail.com.


The History of Financial Literacy, by Samantha Rose

More people confident they know finances – despite the evidence”, Ohio State University

Martha Harris Myron, JSM, is a native Bermudian with US connections, an author, financial columnist, and former qualified international financial planner Contact: martha.myron@gmail.com

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Published April 22, 2023 at 7:51 am (Updated April 24, 2023 at 7:56 am)

Fighting decline in financial literacy

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