Various studies show that the majority of people have little or no knowledge of basic financial issues.
Worldwide studies by the OECD show that consumers in virtually every country lack adequate financial backgrounds or understanding and that they underestimate their needs for education in the financial area. Surveys across the US, for example, show that many feel financial issues are just too complicated, while research funded by the European Commission underlined that, in Eastern Europe, almost half the population does not have a bank account, which is the basic starting point of any financial operation.
Observers agree that the lack of basic financial understanding among consumers fuelled the crisis; US Treasury Secretary Timothy Geithner recently went as far as to state that the lack of financial literacy among young people is a 'national crisis'. As a consequence, people are becoming increasingly aware of the importance of having financial skills.
Research carried out by Visa in the US revealed that the vast majority of parents interviewed were in favour of financial education at school for their children, and thanks to the recession, advocates of improved financial education are seeing support from decision-makers.
Countries across the EU and the Commission itself have already launched a range of projects to offer financial education to schoolchildren, workers and retired people - a move which ACCA strongly supports. Several of these programmes are aimed at teachers, giving them the necessary tools to teach new subjects. The UK has brought forward plans to teach children financial education (from September 2011 as part of the Children, Schools & Families Bill), although, in this case, the plans have been put on hold due to the impending general election.
Educators and policy makers need to ensure that basic financial education is incorporated within the school curriculum so that pupils are taught the importance of finance, including tax, savings, debt and pensions. A solid foundation of monetary awareness will empower them to attain higher levels of responsibility, more successful entrepreneurship, ultimately leading to better managed businesses and the individual's self-sufficiency in financial matters.
Financial education is an important means of enabling consumers to make informed and responsible decisions about their personal finance, which has a bearing not only on their lives, but also on society and the wider economy.
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