Hira (2009) explains it in terms of, . The transmission of financial knowledge via family interactions has led some researchers to include parental education level and financial sophistication as variables in studies of financial literacy among American adolescents (e.g. A later study by Peng, Bartholomae, Fox, and Cravers (2007) that examined the impact of financial literacy at high school level and college education somewhat corroborated these findings. One of the reasons why financial education is a worthy investment from an early age is because its benefits go beyond the individual beneficiary of such a program. Please check you selected the correct society from the list and entered the user name and password you use to log in to your society website. Login failed. Last, we discuss the implications of this research for policy. The results of limited empirical studies implemented to evaluate financial education programs, including those in few African countries, showed that enhancing financial literacy and personal financial decision making capabilities of people would enhance the outcome of financial inclusion and other poverty reduction initiatives for the fact financially literate people can demand and properly use beneficial financial services such as savings, microcredit, insurance. Financial literacy is the education and understanding of various financial areas. Some of the students would naturally not make it to tertiary education but join the workforce immediately after high school. Many of these students would then ask for supplementary funds from family and others which are never paid back. The topic itself aims to inculcate in students skills to be able to make calculations using money; convert one currency to another; and use given data to solve problems on personal and household finance involving earnings, discount, and profit and loss thus providing a foundation for some PFL content. Although the syllabus aims to develop skills to assist learners in solving technical problems, the thrust is on issues pertaining to learners developing into accounting practitioners in different organizations and in different capacities. According to Losey (2009, cited in Georgiou, 2015), there is a rise in college suicide deaths related to credit card debt and student loans. The present study approaches this issue of financial knowledge transmission from a communication studies perspective by considering family … The objective of this review article is to show the concepts and significance of financial literacy and how it can contribute to improving socio economic wellbeing, financial sector development, poverty reduction and sustainable growth in developing countries in Africa. Personal financial literacy (PFL) is an imperative life skill that all 21st-century students should have. . financial literacy be treated as a complex, dynamic construct. Create a link to share a read only version of this article with your colleagues and friends. Fernandes, Lynch, and Netemeyer [2014] review research on financial literacy, financial education, and consumer financial outcomes. Such situations could be averted if these students came into tertiary education financially literate, a recommendation the duo also make. The school curriculum ought to equip students for both the present and future, either as consumers and investors, to understand the financial terrain and how best to maneuver and get the best value for money. If they do not get any financial assistance from the government, the project would never be successful. Find out about Lean Library here, If you have access to journal via a society or associations, read the instructions below. They found that earlier experience with personal finance correlated with savings rates later on in life. The focus of the syllabus is on equipping learners with business knowledge skills to enable learners to be employed or self-employed. Financial literacy among Australian university students, An analysis of personal financial literacy among educators, Education and saving: The long-term effects of high school financial curriculum mandates, Are low-income Canadians financially literate? The inability of the school curriculum to impart PFL skills to students will likely produce individuals who are more likely to have higher levels of personal and household debt (Lusardi & Tufano, 2009), plan less for retirement (Lusardi & Mitchell, 2007), and less likely to manage wealth effectively (Stango & Znman, 2006). This article tests a conceptual model of perceived parental influence on the financial literacy of young adults. Close to 61 million (26%) adults do not pay their bills on time. In South Africa, PFL is located within the economic and management sciences subject where 40% of the content is financial literacy, 30% is the study of the economy, and 30% is focused on entrepreneurship (Republic of South Africa, 2011). Members of _ can log in with their society credentials below, Gosaitse E. Solomon, Trust Nhete, and Burman M. Sithole, This article is distributed under the terms of the Creative Commons Attribution 4.0 License (. Although mathematics offers some knowledge and skills that may be applied to PFL, it falls short on many other topics that it does not cover such as insurance, managing risk, debt management, broader coverage of financial institutions, and their services to name a few. Thus, financial literacy refers to both knowledge and financial behavior, and this paper will analyze research on both topics. The failure to both promote and reinforce PFL in schools has the potential to affect consumers’ ability to make sound financial decisions about present and future personal needs (Davis & Durband, 2008). With regard to personal financial knowledge, 40% of adults have rated their knowledge of personal finance at Grade C, D, or F. As unfortunate as these statistics may seem, financial literacy is reported to be far much lower in third world countries, Botswana inclusive (Xu & Zia, 2012). the ability to use knowledge and skills to manage financial resources effectively for a lifetime of financial wellbeing” (p. 66). Without proper training and discipline, people cannot be expected to make rational financial decisions and neither can financial markets be trusted to create a balance in the economy without a deliberate input of the human mind (Hira, 2009). The U.S. Financial Literacy and Education Commission (2007, cited in Yates & Ward, 2011) defines financial literacy as, “. In this article, the authors compare the financial literacy of high school students in Hamilton, New Zealand, with samples from Japan and the USA. Interventions to improve financial literacy explain only 0.10% of variance in financial behaviors. It led to foreclosures, bankruptcies, job losses, escalating credit card problems, and affected the global economy as well. They lacked resources and in-service training in the emerging issues. If you have access to a journal via a society or association membership, please browse to your society journal, select an article to view, and follow the instructions in this box. Mathematics is a mandatory subject in secondary schools in Botswana. Policy makers would also have a reduced regulatory and supervisory workload which is often associated with monitoring, interventions, and pushing for reforms of the financial sector. Studies have shown that financial literacy skills gained at a young age last to adulthood. If you have the appropriate software installed, you can download article citation data to the citation manager of your choice. The BGCSE have two major facets: Group 1 entailing core subjects (English, Setswana, and mathematics), and optional subjects group which are further classified into sciences, humanities and social sciences, creative, technical and vocational, and enrichment subjects (Republic of Botswana, 1998). A standardised financial literacy curriculum ensures that all students in a school system receive financial knowledge, which offers them the necessary support to make informed decisions about money management and practise appropriate financial behaviour. According to Georgiou (2015), teens in the age bracket of 12 to 19 have an estimated spending power of US$819 billion dollars globally per year. Corpus ID: 55189943. Personal financial literacy (PFL) is an imperative life skill that all 21st-century students should have. Bernheim, Garret, and Maki (2001) undertook a study that assessed the impact of financial literacy taught at high school level. the site you are agreeing to our use of cookies. Another reason why financial education is of paramount importance is the complexity of products and services that have come about as a result of the evolution of technology and financial innovation. This means the vast populace, who have no entrepreneurial mind-set or intentions are left out in the lurch. The secondary school financial literacy program would lay foundation for tertiary education and career choice. These findings are important, since financial literacy is linked to borrowing, saving, and spending patterns. According to the OECD (2005), people with the most financial knowledge are often in the well to do class. There is no single agreed secondary school PFL national syllabus or standard. Topics such as production and satisfaction of needs and wants, credit trading, consumer protection and customer relations, simple contract of sale, methods of payment, banking, principles of insurance, types of insurance, and procedures of buying insurance and making claims are relevant to PFL. The impact of financial literacy on retirement planning is a well-established issue in the existing empirical literature; our main contribution is proving that financial knowledge not only impacts retirement planning, but also the decisions of entering a private pension scheme (or devoting the severance pay to a private pension scheme). In this section, we discuss why financial literacy is important and why it should be introduced in the Botswana secondary school curriculum. PFL is an invaluable survival skill in the 21st century (Hite et al., 2011). Different countries have included various and diverse content in their curricula, irrespective of whether the course will be infused into existing subjects or will be offered as a stand-alone course. Jump$tart (2014) reports on the results of a survey of 962 first-year students from five universities and colleges across the United States who took a 50-item knowledge quiz covering five core areas of financial literacy (earning, spending, saving, borrowing, and protecting). Having explicated on the limitations of the current business education subjects and mathematics offered in Botswana secondary school on equipping students with financial literacy knowledge and skills, we move forward to suggest how PFL may be implemented. Without proper training and discipline, people are more inclined to make misinformed decisions about the use of financial resources. The National Foundation for Credit Counseling and the Network Branded Prepaid Card Association (2013) gives the following statistics about adults in the United States: 40% of adults prepare a budget and keep track of their spending, 43% worry about having insufficient savings for an emergency, and 38% are concerned they may not have enough savings for retirement. This article discusses the benefits of personal financial education, the inadequacy of current business subjects to meet this need, and concludes by recommending a mandatory PFL subject in the Botswana secondary school curriculum. The Botswana General Certificate of Secondary Education (BGCSE) curriculum came about as a result of the localization of the Cambridge Overseas School Certificate starting in 1999. Their job portfolio would entail such functions as retirement planning, advising people on insurance, investments, and other financial products in consultancy firms, insurance companies and banks, and other financial institutions. There are a variety of studies that indicate that individuals with higher levels of financial literacy make better personal finance decisions. Financial knowledge also has wealth distributional implications. This national crisis may seem Research shows that the levels of financial literacy in both developing and developed countries are very low across people of all ages. To order reprints of this article, please contact Dewey Palmieri at dpalmieri{at}iijournals.com or 212-224-3675. Table 1. Students at secondary school level are already preparing for college and university where they will have to make financial decisions for themselves. In addition, they will naturally incur higher interest rates which are burdensome to them as consumers but more profitable to commercial banks because unsecured loans tend to have relatively higher interest rates than secured long-term loans (Jefferis, 2012). It is important that financial skills are imparted to students during their early days of schooling and before they are exposed to the ever-increasing complex financial products the financial services industry is always dangling via numerous media. PFL avails every individual the opportunity to manage and control their own personal finances irrespective of their position, career, and status in society. The poor who lack financial knowledge are more likely to spend unwisely, to be defrauded of the hard earned means, and even miss on good investment opportunities (OECD, 2005). FundingThe author(s) received no financial support for the research, authorship, and/or publication of this article. Even when they make decisions to take student loans, they would be in a good position to evaluate creditors and settle for better deals. Ratio of Business Subjects and Mathematics to Total BGCSE Student Enrollment. Below we analyze the level or extent to which the curriculum endeavors to equip students with PFL skills through the subject matter and content of the business education and mathematics syllabi. . Schools would also have to commit financial resources to the project to fulfill such a requirement. Teachers may not necessarily have the knowledge and competence levels required in infusing emerging issues they are expected to integrate into their specific teaching subjects and this could compromise learning outcomes. This perhaps explains why financial literacy programs have a stronger leaning toward financial management for entrepreneurship to the neglect of personal financial management (Xu & Zia, 2012). Financial education educates students on the concept of risk and predatory lending (such as payday loans and loan sharks). It also analyzed syllabi for different subjects at senior secondary school level to determine the extent to which they integrate or infuse financial literacy content. Also, the timetables do not have to be changed to cater for a new subject. Having gone through the literature on teaching personal finance at high school level, we have arrived at the conclusion that PFL should be a compulsory and examinable subject in secondary schools. Third, fourth and fifth section summarises the literature on the components of financial literacy, i.e. SAGE Publications Inc, unless otherwise noted. Personal financial literacy (PFL) for school going children has become an important intervention against issues pertaining to saving, investing, and spending habits of teenagers and how this will influence their future financial behavior. By this we mean that it is composed of multiple elements that develop and interact with one another over time (Figure 1). The objective of this review article is to show the concepts and significance of financial literacy and how it can contribute to improving socio economic wellbeing, financial sector development, poverty reduction and sustainable growth in developing countries in Africa. Other topics relevant to PFL but taught with reference to businesses only include keeping books, business finance, business planning, risks in business, and customs and excise department in Botswana. The students who took personal finance fared better as adults in terms of financial knowledge, savings, and wealth amassed. The neglect of PFL is such an incredulous oversight especially that financial literacy may have a bearing toward achieving such a glorious envisioned future. According to Beal and Delpachitra (2003) “. Lack of financial knowledge in adulthood may affect negatively on their spending attitudes, behaviors, and personal financial management. Also, such knowledge would be helpful in equipping students to consider other options available to them besides loans. We also offer new evidence on financial literacy among high school students, drawing on the 2012 Programme for International Student Assessment implemented in 18 countries. About Financial literacy. These include limited availability of time and other resources, different level of rigor in courses and unclear timing in implementation of financial education. Lean Library can solve it. The Botswana Examinations Council (BEC; 2017) website provided data on the total enrollment at BGCSE and the number of students who sat for final examination for each subject. Several authors and researchers have diverse meanings of the term (Buckland, 2010; Fox, Bartholomae, & Lee, 2005; Marriott, 2007). I have read and accept the terms and conditions. As is widely believed, business subjects incorporate some elements of financial literacy, albeit at different levels, while mathematics is also inclusive of some topics that revolve around the basic PFL elementary skills. Moreover, enhancing financial literacy is at the advantage of financial service providers and contributes to the development of a stable financial system, a sustainable economic growth. According to Jefferis (2012), the ratio of household debt to disposable income has been on the rise over the years. teaching financial literacy in schools and given the USA experience seeks to , this paper justify why the Australian Government would be so dedicated to this initiative. Each of these alternatives has pros and cons. His research interests include entrepreneurship education, personal financial literacy, and issues of pedagogy in business education. Lusardi et al., 2010). Although some topics such as budgeting and forecasting and cash flow forecast may be relevant to PFL, the main focus in this syllabus is on the business entity rather than the individual. Emphasis is on how the learners can be effective stewards and custodians of business owners’ resources. The syllabus rationale includes the need for learners to explain commercial activities and behavior of institutions in the commercial world (Republic of Botswana, 2002c). For this reason, policy makers around the world recognize that financial education is an integral component for meaningful development (Xu & Zia, 2012). Jump$tart (2015) describes PFL as “the ability to use knowledge and skills to manage one’s resources effectively for lifetime security” (p. 2). This paper uses data from the 2009 National Financial Capability Study to examine financial literacy and financial behavior in a sample of approximately 4,500 young adults age 25 to 34. These skills are invaluable to both students who go to tertiary education and those who do not as the knowledge they gain will carry through into adulthood. PFL Content in Secondary School Curricula, Arguments for Mandatory Personal Financial Course in Secondary Schools, The Case for the Need for Personal Financial Literacy Education in Botswana Secondary Schools, http://www.creativecommons.org/licenses/by/4.0/, https://us.sagepub.com/en-us/nam/open-access-at-sage, Hite, Slocombe, Railsback, & Miller, 2011, Organization for Economic Co-Operation and Development [OECD], 2005, National Standards for Business Educators (2013), National Standards for Business Educators, 2013, National Foundation for Credit Counseling and the Network Branded Prepaid Card Association (2013), Peng, Bartholomae, Fox, and Cravers (2007), Botswana Examinations Council (BEC; 2017), Brown, Collins, Schmeiser, and Urban (2014), http://www.bec.co.bw/results/results-summary-psle-jce-bgcse/bgcse-results-summary, https://www.federalreserve.gov/pubs/feds/2014/201468/201468pap.pdf, http://www.indstate.edu/business/sites/business.indstate.edu/files/Docs/2009-PB-10_Hira.pdf, http://www.econsult.co.bw/tempex/file/Economic%20Review%202012%20Q4%20Final.pdf, http://jumpstart.org/assets/files/Making%20the%20Case%202014_2.pdf, http://www.jumpstart.org/assets/files/2015_NationalStandardsBook.pdf, https://www.nfcc.org/NewsRoom/FinancialLiteracy/files2013/NFCC_NBPCA_2013%20FinancialLiteracy_survey_datasheet_key%20findings_032913.pdf, https://www.champlain.edu/centers-of-excellence/center-for-financial-literacy/report-national-high-school-financial-literacy/2013-national-report-card, http://www.paris21.org/sites/default/files/3144.pdf. 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