financial education as government task?

FINANCIAL EDUCATION AS A GOVERNMENT TASK?

Most recently the German government announced an initiative to foster financial education. Now, this is clearly a good thing at first sight: general financial education is surprisingly low in this country, that still belongs to the global top 5 economies by GDP.

This may be due to a lack of economic training in the public school system, deeply rooted suspicion towards financial markets, a caring government making the widely exported term ‘kindergarten’ applicable to a much wider part of the society than just the young generation.

In order to bridge such a long established disconnect between the success of German industry and the financial education of the population you should start with the children, of course. Teaching the basics of economics and finance as well as entrepreneurship would be a good way to see more knowledgeable Germans at some time in the future.

However, this may be a more difficult task than one might think: many teachers lack the knowledge themselves, that they will now be expected to teach. A good part of them has a political orientation that does not see knowledge in economics and finance as a natural fit for their lifestyle. Which comes to a surprise, as even when they buy some rolls in a bakery, they are part of the economy themselves – like it or not.

Of course, you can bring in the knowledge from the outside: there are many private initiatives for this and you could think about setting up a government agency creating some more public jobs. But it will just take even more time until you reach the ultimate customers, the young people that go to school every day. And without supporting teachers you will not be going anywhere in the long term. Ultimately, the task of coordinating and supervising all the initiatives and bodies will offer quite some risk potential for political leaders in charge.

So maybe the government should take the time to realize its strategy bottom-up by changing the education system from the inside. But unfortunately, Germany does not have that one political body responsible for education, there are at least 16, as the Bundesländer are responsible for this by constitution. So, if you have watched processes of this kind in regional states with proportional representation before, you may be inclined to wish the German government good luck.

So let us look at things from a different angle: maybe the eye-striking strategy of starting at schools is not it. Maybe within the German political setting, starting with adults is not a bad idea after all. Yes, adults are more difficult to teach and more stubborn when it comes to changing their patterns. But you can address them directly without having to win intermediaries first. And you can do that from just one central hub, you do not need to coordinate 16 Länder. And if you win the adults, they can teach their children, too.

At BeeWyzer we have gained a lot of experience in teaching adults on topics of private finance. Without telling the recipe of our ‘secret sauce’, here are some basic thoughts on how to do it successfully:

• It is the right combination of different areas of knowledge (basics of economics and finance, financial planning, psychology and many others) that needs to be curated
• These knowledge areas have to be tapped in the adequate depth from very deep to very simple, it is their patchwork match that creates a successful curriculum
• Didactics have to be state-of-the art and add entertainment features to tackle today’s shrinking attention span
• Tools that people can apply directly to their personal situation have to be integrated, as only if you do something practical and useful, you really learn
• Digital platforms are key and should contain automations for making people get back time and again (repeat, rehearse, update)
• Some applications should be for free, some should have a symbolic price in order to give it some value.

During the pandemic most people -even adults- got used to online learning tools. The government could build on that and help financially unskilled citizens to help themselves.