By: Belmiro Miguel Nhamithambo (FSDMoç Knowledge, Monitoring and Learning Analyst)
‘’You have the chance to start learning about money . We didn’t have the same chance as you, to learn at an early age in order to minimize committing wrong decisions that can affect your life in the future’’
Mozambique Stock Exchange (BVM) CEO opening speech during 2017 Global Money Week Mozambique main ceremony.
Mozambique celebrated Global Money Week for the second time in a row this year, an event that was held jointly in more than 120 countries. This is an event with the objective of inspiring children and youth about money, savings, investment and becoming entrepreneurs. The theme for this year was Learn, Save and Earn. Learn because educating children and youth is key to raise a generation capable of making wise decisions about their finances and their lives; Save because it is important for children and youth to develop saving habits while still young and; Earn which is linked with the development of investment and profit skills.
This year main ceremony was attended by almost 200 children from 5 schools of Maputo province while other events were held in every province where the central bank has representations.
FSDMoç as an entity to help drive financial inclusion in Mozambique, where financial literacy is one of its key intervention joined the event with child and youth friendly initiatives. FSDMoç produced three radio novels with relevant topics around day-to-day situations youth face handling making decision of their finances namely 1) How to take care of banks card 2) Proper use of ATM and 3) Using internet and mobile banking. The radio novels were broadcasted at the Politécnica Radio. FSDMoç also supported university students to develop a mobile based quiz application that runs on android. The application was used to test the level of acquired knowledge of children after their exposure to lectures from Central Bank, Mozambique Insurance Supervision Institute and Mozambique Stock Exchange.
It was clear from the results and level of engagement and participation of children and youth that: (1) It is of utmost importance to deliver financial education to this target group, and this should be an ongoing effort; and (2)These type of events cannot stop here or be sporadic. It should be something continuous as behavior change takes time to be effective. It is important that financial literacy, defined as the ability to use knowledge and skills to make effective and informed money management decisions, begin to be taught by parents and guardians at home. It has been proven that the family environment is where the future generation is molded and parents and guardians should be the primary educators when it comes to teaching children the skill they need to develop handling of finances competencies.
The reality is that many adults avoid conversations around money with their children. This can be changed. For instance, many parents give their kids allowances in order for them to cope with their day-to-day expenses. The allowances could be aligned with some teaching to develop good financial habits just for instance, putting in place the following elements:
Budgeting: Budget out a weekly allowance for spending money for chapa, snacks, photocopies etc
Set rules of the game: let the child know that with his allowance he is supposed to use the money wisely, otherwise he will be short of money if he uses more than he have. If that occurs he should not be given any additional funds so that he learns that happens when he overspends;
Set Objectives: align the allowance you give with the results the child obtains in various tasks he has trusted: doing homework, cleaning the house, taking care of his toys, being at home in time, etc
Lesson Learned: give some compliments and some word of advice on the financial decisions the child will be having with his allowance. This can serve also as an opportunity for the parents to share the financial mistake they have made.
As the children master the basic concepts, we can gradually include new concepts related to Investiments in capital markets, importance of insurance, financial products and services and suitability of each, etc. As they get this habit they will know the value of money and start to understand easily about investing, costs of university, value of paid work, plan to purchase their first vehicle and stay out of debt.
By developing this kind of habits in children, they will learn and develop good habits around saving, earning and spending wisely, they will know how money works and why it is important to use it judiciously which will eventually become part of their daily lives and an opportunity to have future generation of adults financially literate.