The U.S. is not alone in its attempts to address financial
literacy in public schools. An international push is on to teach
kids the money skills they need to navigate today's increasingly
challenging financial landscape.
Financial instruments are much more complex than they were a
generation ago, when credit card usage was limited and debt was
confined to a mortgage and maybe a car loan. The options have
multiplied all over the world. "That's why this is a global
movement," says Annamaria Lusardi, distinguished professor at The
George Washington University School of Business and founder of the
Global Financial Literacy Excellence Center. "It's not just the
U.S., though the U.S. has a more complex economy and has bigger
problems than other countries in my view."
International comparisons are tricky
When it comes to the financial know-how of young people, comparing
different countries is difficult. The Organization for Economic
Cooperation and Development for the first time included financial
literacy questions on its 2012 Programme for International Student
Assessment (PISA), an exam given every three years to 15-year-olds
around the world. (To see how well you fare on some of the OECD's
sample questions, take our
.) Those results won't be released until later in 2014. But PISA
math results released in December ranked the U.S. at No. 36
-- below average for the 65 countries involved. Since numeracy is
tied to financial literacy, it's not a stretch to predict that
American students will come out somewhere around the middle of the
financial literacy results.
A 2012 World Bank report, "
Financial Literacy around the World
," provides a glimpse of how adults in different countries compare.
It looked at how they answered three questions that cover basic
understanding of compound interest, inflation and risk
diversification. The U.S. ranks near the bottom of seven
high-income countries on the interest and inflation questions, and
toward the middle on the risk problem. The surveys were given in
different years and some countries used variations on the
questions, so comparisons are only approximate.
Lessons from abroad
As the U.S. tries to tackle financial education, it is keeping a
close eye on what other countries are doing. Teachers in England
are required to incorporate personal finance topics into math
classes in 2014, bringing that country up to the standards of
Northern Ireland, Scotland and Wales, where schools are already
required to teach personal finance. Australia is also rolling out a
national financial literacy curriculum in its public schools.
Those kinds of national mandates are not possible in the U.S.
with its decentralized education system. "Australia and the U.K.
have very top down systems where the government says, 'You will put
this in your curriculum,'" says Jeanne Hogarth, vice president of
policy at the Center for Financial Services Innovation and a
frequent financial literacy speaker. "In the U.S., we have a very
grass roots approach when it comes to education. Local school
boards decide everything."
The U.S. might draw lessons from New Zealand, whose education
system is also decentralized. New Zealanders scored higher than the
residents of 14 other countries (not including the U.S.) when
measured on eight core financial knowledge concepts by the
International experts routinely praise the small country for its
initiatives -- it was the first to create an independent website
dedicated to educational resources for consumers (
). "In the past few years, the government has been putting strong
emphasis on increased financial capability as one of the key
elements in improving the economic health of individuals in the
nation," says Pushpa Wood, director of the Financial Education and
Research Centre at Massey University.
Wood points out that other factors probably contribute to New
Zealand's high scores: a small population (about 4.4 million) that
is relatively easy to reach with educational messages and a high
proportion of banked consumers who are engaged with financial
Still figuring it out
Wood says there is still much room for improvement. Much like the
U.S., New Zealand is still feeling its way to a more financially
According to Wood, financial literacy is included by implication
in the country's core education objectives, which stipulate that a
student should be able to contribute economically to the nation by
the time they leave school. But New Zealand cannot mandate
financial literacy classes in public schools, for reasons similar
to those of the U.S. Individual schools decide whether to teach
personal finance topics.
"We're now adopting a beachhead strategy," says Malcolm Menzies,
group manager of research and corporate services at New Zealand's
Commission for Financial Literacy and Retirement Income. "We've
seen success in schools that have passionate champions for
financial literacy and we're working with them to engage with other
The government is also trying to address another pain point:
teacher confidence. New Zealand is piloting programs to train
teachers not only in the financial knowledge they need to pass on,
but also in effective methods for teaching it. "The holy grail is
to have teachers be confident enough that if a financial question
comes up in another class such as social studies, they can address
it," says Menzies.
He would like to see the pilot program expanded, pointing to
Australia, which is pouring millions of dollars into training
thousands of teachers. "If we could put 10,000 teachers through,
then we'd be getting somewhere," he says.
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