Battle is joined for financial literacy

 
Allister Heath
MY suggestion yesterday that top City firms should back a new educational fund for financial literacy struck a chord with readers. I have been inundated with emails of support, with all sorts of ideas about how to teach children and adults about numbers and how to manage their personal finances. City A.M. will be campaigning to encourage City institutions and individuals to embrace the fight for financial literacy, and in the days and weeks ahead we will be highlighting successful initiatives, big or small.

Perhaps the most intriguing idea would be to set up a new, voluntary system of financial exams. Anybody who passed the qualification would be offered easier access to credit – and hopefully even lower interest rates – as they would be deemed safer bets and less likely to default. Consumers’ credit ratings would become altogether more sophisticated – closer to how AAA businesses obtain better rates than BBB businesses. Banks could make these courses available as online learning or as DVDs. Job-centres could also distribute course material, with the tests becoming part of the benefit claim process.

There were plenty of other ideas. One was to involve retired City folk, creating a community, on-line and off-line, of mentors and coaches. Another highlighted the need for “buyers’ training” – a nice name for empowering consumers. Several emailers mentioned the need to make sure that financial illiteracy ceased to be seen as clever (in the same way that some boast of their technophobia). One reader suggested that large companies could start offering free seminars to their non-financial staff: cleaners, security guards, catering staff, loading bay staff and receptionists.

For children, there was a strong feeling that peer pressure and role models are key forces to harness. Celebrities could be enrolled. As one reader pointed out, we should never forget that curiosity is a big step towards literacy and knowledge – so children’s interest in personal finance needs to be kindled, one way or the other. It is essential to create learning systems outside of schools, and to use the latest technologies. Learning can be fun, interactive and very different to the traditional classroom model, as a myriad of new educational games and devices has proved. As much as possible, iPhone games and other digital media should be used. Fantasy football-style team selection techniques applied to investments could also work, as would real cash prizes and lotteries.

The need to make learning more like entertainment also applies to adults. A few years ago, Trustee Toolkit, an e-learning programme aimed at pension fund trustees, many of which are not experts, showed how this could be done: it was based around a soap opera in which a pension scheme is hit by catastrophes.

There are plenty of interesting projects already in existence, thanks to pioneering companies and volunteers. One is the National Number Partners, established to promote business involvement with schools. Related websites include www.numberpartners.org, which holds numeracy resources; and a sister website www.thebeeprogramme.com, which holds financial literacy resources. For adults, some pioneering websites include Straight Statistics and Getstats. Thanks to all who emailed – and I’m still interested to hear more of your great ideas.

allister.heath@cityam.com
Follow me on twitter: @allisterheath