On September 17, Gimi lectured for Finansinspektionen's network Gilla Din Ekonomi on the theme ‘How to teach children about money without “money”?’. The network, consisting of 90 different authorities, organizations and companies, had the opportunity to listen to Gimi's CEO Philip Haglund who in his presentation answered the question: Will the next generation be financially illiterate? Gimi also participated in a subsequent panel discussion together with Swedbank and The Royal Coin Cabinet where the network was allowed to ask questions related to children and money. The main question for the panel was 'Who is responsible for teaching our children about money?', which we would like to answer in this blog post.
The network Gilla Din Ekonomi has the mission to bring government agencies and private actors in the financial sector together to find solutions to issues concerning people's financial understanding, their economical situation and their future opportunities. The network is coordinated by Finansinspektionen and consists of over 90 different authorities, organizations and companies. Each year, the network holds one to two meetups with specific themes where three actors are given the opportunity to lecture and participate in a panel discussion. On September 17 the theme was: How to teach children about money without "money"? and the participants were; Philip Haglund and Sofie von Krusenstierna from Gimi, Arturo Arques and Ulrica Sjöving from Swedbank and Cecilia Von Heijne from The Royal Coin Cabinet.
How to teach children about money without "money"?
The theme for the meetup was based on the question of how our didactics around money and economics should be adapted when we go from a society with cash to a society with digital money. The focus was children and their financial understanding, and how we as adults can give them the conditions they need to grow up and become financially independent individuals. The lectures were followed by a panel discussion in which the question stated below became central. With this blog post, we want to enable more people to take part in Gimi's answers. At the bottom of this blog post is a summary of the answer and also a link to a form where you are welcome to share your thoughts on the subject. Nice reading!
Today we have education in personal finance in school. At the same time, research shows that we inherit debt behavior from our parents. How far do the parents' and school's responsibilities extend? Can they influence one or the other?
Gimi's answer to the question of responsibility
This is a very interesting question, especially since it is based on the fact that we have financial education in schools today. To be able to address the question of responsibility, we must therefore begin by familiarizing ourselves with the existing curriculum in the swedish school system and thereby provide a perspective on the financial education to which the question refers to. So let's start there:
Two hours of teaching per year - is it enough to be classified as education?
For children in primary school, ‘Consumption and finances’ is a part of their Home and Consumer Knowledge Education (HKK). Thus, financial education isn’t an independent course, it can be compared to the component ‘Outdoor life’ in the children's teaching of Sports and Health (Idrott och Hälsa). However, Sports and Health has significantly more teaching hours than HKK. Skolinspektionen (The Swedish Schools Inspectorate) even describes how HKK is the smallest course in primary school in terms of the number of teaching hours. In their report (which you can find here), they explain how students in grades 1-6 have a total of 36 teaching hours spread over six years and how students in grades 7-9 have a total of 82 teaching hours spread over three years. The report also shows that the quality of education does not correspond to the quality of other courses as the number of planned and guaranteed teaching hours do not match (see picture). Sveriges Radio has also reported on this deficient level in the teaching of HKK.
In terms of the content of the Home and Consumer Knowledge Education, financial education, as previously mentioned, is only a sub-part of the education. According to Skolverket’s (The Swedish National Agency for Education) curriculum for HKK (which you can find here) the education is divided into three main areas where the student must be “given the conditions to develop his/her ability to”:
- Plan and prepare food and meals for different situations and contexts,
- Manage and solve practical situations at home
- Evaluate choices and actions at home and as a consumer and from the perspective of sustainable development
Based on this, it can be said that children's financial education is one third of their total HKK education in primary school. A quick estimate shows that children aged 6-12 receive a total of 12 teaching hours in personal finance spread over six years (corresponding to 2 hours per year) and children aged 13-16 receive a total of 27 teaching hours spread over three years (corresponding to 9 hours per year).
If we dig into more detail in the central content of HKK, we see how the financial education for children in grades 1-6 corresponds to 2 of 14 points in the course content (see picture). How much time is spent on each point, however, is not specified but often up to each individual teacher to decide.
Gimi's conclusion: children do not receive any financial education in school
Based on this, Gimi believes that two hours of teaching in Consumption and Economics per year during the child's first six school years cannot be equated with the child receiving a financial education. Nor can the next three consecutive years, where the child will receive nine hours of education in Consumption and Economics per year, be classified as a satisfactory base for financial literacy.
Some believe that the personal financial education that the students receive in high school should also be included, but even there the financial education is only a sub-part of another course; Social sciences (samhällskunskap). If we look at Skolverket’s curriculum (which you can find here), personal finance is not even included as one of the overall points in the course content (see picture). With this in the back of our heads, Gimi means that major measures have to be taken for children to learn financial literacy, and that brings us into the main topic; Whose responsibility is it?
How far do the parents' and school's responsibilities extend?
The school is responsible for theoretical education
Based on the above description, there are a lot of things that the school needs to work on. In our opinion, giving children and young people theoretical education in financial literacy is an area that should be the school's responsibility. At the same time, we understand that the changes that need to be done cannot be resolved in the blink of an eye. To succeed, it is necessary to rewrite the curriculum, it is necessary to have teachers who are educated in financial didactics and it is necessary to have access to educational tools and materials that students can use in their education.
The lack of financial education in schools is something politicians, teachers and researchers are fully aware of. That the situation is urgent is also obvious, but despite this, the solution shines with its absence. For example, Jessika Roswall (M) submitted a motion to the Government to introduce personal finance as an independent course in primary school. A motion that went through but could not be introduced as there was a lack of didactic resources and pedagogical skills. A very sad message in our opinion. In Jessika Roswall's motion, however, Gimi was mentioned as an exemplary example, as the app is seen as a successful tool that caters financial education to children, which you can see in the excerpt in the picture below (you can find the entire motion here).
Parents are responsible for practical exercise
At the same time as the schools are struggling to make additions to the curriculum and implement the theoretical education in private economics, children also need to receive practical skills practice in order for their financial knowledge to be lasting and comprehensive. Just like when we are going to get a driver's license, it is not enough to struggle with theory, we also need to get in the car and drive. It works the same way with money. Children need to have access to their own money and be given an opportunity to use them in their everyday lives. At this point we mean that the parents have a big responsibility.
The fact that young people's level of financial knowledge is alarmingly low is neither a lie nor a novelty. For example, the Swedish Enforcement Agency (Kronofogden) recently announced a report showing worrying figures on the number of young people applying for debt restructuring. The Enforcement Agency's unit manager Per-Olof Lindh comments on these figures in the following way (the article for the quote can be found here):
"For the first time in my life, I am very concerned about young people's financial skills and status."
The background to this negative trend is mostly due to the fact that children and young people have been excluded from the financial reality according to our transition from cash to digital money. From the fact that children in an educational way learn about personal finances through weekly or monthly allowances, piggy banks and wallets, children rarely have contact with money today. Parents almost never have coins or banknotes in their pockets, shops do not accept cash and the weekly allowance is forgotten. For many children, money is the same as "mom and dad just blip their card or use Swish", but the understanding of what it really means to pay with a card or transfer money is very low. The knowledge of how you run out of money or how the money can grow is almost non-existent for many children today.
At Gimi, we believe that it is the parents' responsibility to create opportunities for the children to practice their financial knowledge in real life. There is no doubt that digital money is here to stay, parents must therefore give their children the conditions to handle this digital money and let them practice to earn, save and spend their money independently. This means that the parents must ensure that the children have a card to pay with, that the children have access to statistics for their financial actions that are visualized in a pedagogical way and that the child has a bank of exercises to train their abilities to make wise financial decisions. Gimi provides all these things today, which you can read more about here.
We are aware that all parents can not provide their children with the tools they need. Although Gimi's free version provides a certain level of financial education, we believe that the premium version Gimi Master is needed to make sure the children have a complete financial education. Even if this cost is very low (SEK 39/month), there are families who count every penny and then even this cost can be painful - even if the parents know that the value for the children's future is extremely high. At this point we therefore can see that there is another player who bears a big responsibility. Let's go into this actor now:
The society is responsible for providing conditions for school and family
In 2008, the Swedish Enforcement Agency conducted an investigation which showed that Swedes' over-indebtedness cost society SEK 30–50 billion every year (the report can be found here). Another report from 2015 by Richard Ahlström, associate professor of psychology at the Department of Social Sciences at Mittuniversitetet in Östersund, shows instead that the costs were significantly higher. In his report (which you can find here), he showed that the combined costs for health care, loss of production, as well as unemployment benefits, long-term sick leave and sickness pension corresponded to a sum of SEK 201.4 billion per year, i.e. four times as much. What the holistic sum is is probably not possible to calculate, but Johan Krantz, the analyst at the Enforcement Office, personally believes that the sum lands just over 200 billion annually. On the other hand, he can clarify the direct cost on the basis of the Enforcement Officer's planned and decided debt restructuring. In 2019, it landed at SEK 254 million.
The Swedes' ignorance of finance thereby entails great costs for society and if the negative trend continues, it will not only create a strain on the economy but also a great strain on health care as people in financially pressured situations also run a higher risk of mental and physical illness. See, for example, the report Minuskontot of Hjärnkoll and National Cooperation for Mental Health (NSPH), which shows how there is a clear connection between mental illness and insecure finances.
Many are worried by these negative prospects, not least the Swedish Enforcement Agency's unit manager Per-Olof Lindh. He believes that all actors must take responsibility for curbing this negative trend. In a press release from 16 September 2020, he says:
"We, the adults, need to get better at educating young people on financial issues, both at home and at school."
At Gimi, we therefore believe that the state and the municipality also have a responsibility. They must ensure that teachers and educators receive the resources and skills required to provide children with a theoretical education in financial literacy in school. We also believe that society is responsible for giving parents access to the tools needed for children’s practical exercise in financial literacy. By letting all families have access to the financial education tools that exist today, we could slow down the negative trend significantly and at the same time create an equal society where all children and young people have the same opportunities to become financially independent people. The teacher, author and lecturer Erik Wennstam clarifies the correlation between financial literacy and equality in the following way (you can read the entire interview here)
“Financial education is one of the most important factors when it comes to real equality and bridges the issue of gender or social background. That we continue to keep this knowledge in the public school in the margin is almost a betrayal of today's young generation. Besides, we do it completely unnecessarily, it should not look like this.”
Summary - Who is responsible for teaching our children about money?
To summarize the answer to the question posed during Finansinspektionen's network meeting on September 17 (the list of members for the network Gilla Din Ekonomi can be found here), Gimi believes that there are three actors who all own a part of the responsibility:
- The school is responsible for giving children theoretical education in financial literacy. This education should be an independent course in the curriculum already from primary school.
- Parents / guardians are responsible for giving children practical skills practice in understanding the value of money. This practice should include the child being able to manage their own digital money, gain access to tools with educational visualization and statistics on children's financial behavior, and be given exercises to learn how to earn, save and spend their money wisely.
- Society is responsible for providing the school and families with the conditions necessary in turn to be able to give children financial education and practical exercise. This means that parents must be given the economical subventions to get access to financial tools adapted for children. Teachers must receive education in financial pedagogy linked to financial literacy and the school must be given space for a curriculum change.
At Gimi, we are always interested in your thoughts and ideas. What thoughts did this blog post evoke in you? Please share your thoughts by leaving a comment here, and feel free to share the post!