Editor’s note: This article was first published in June 2013. The news is that the Bank of Spain and CNMV school program had just been joined by more than 400 schools. The program (Programa de Educación Financiera) has continued and grown since, and the figures are from that moment.
A good initiative in Spain, where financial education is finally being taken seriously in schools, for children from the age of 14.
According to El Mundo, more than 400 schools have signed up for the program, which comes from the Bank of Spain and the CNMV (Spain’s securities market regulator).
In other words, the body that supposedly encouraged the sale of preferentes (the preference shares sold to retail savers) so banks could raise capital at any cost, and the CNMV, the body that advised investing in Bankia. Kids!!! You’re in good hands.
Getting a bit more serious, financial education is no game. The lessons a teacher gives you on this subject when you’re young can change the course of your financial mindset for the future, for better or for worse. That’s why children need a teacher who isn’t selling anything, who knows the subject properly and, ideally, doesn’t mince words. I’m not sure that’s what these children are going to get. If the teacher receives the syllabus from these institutions, the idea is probably to win future customers for banking products. And don’t get me wrong: I start from the assumption that the teachers will do it with the best of intentions.
As we said in a previous article, financial education isn’t just knowing about products, it’s a complete change of mindset.
I’ve met financial education teachers specializing in finance for children who talked about the need to save for the future and advised them to open a retirement plan from a very young age. To me that’s a cardinal sin in personal finance, and not so much because of the zero returns of a pension plan as because of the price we pay in “opportunity cost”.
In other words, if a young person manages to save €20,000 and puts it into a pension plan, that’s dead money they won’t be able to use for investment opportunities as they come up, from starting a business to taking advantage of a stock market that has fallen too far.
Then again, as in any profession, the professionals themselves don’t always agree.
Any investment we make while we’re young, if it’s a smart one, should be liquid. Put another way: we should be able to get our money whenever we want. As for banks, by default you should always be wary of what they offer, so you need to know more about investment products than the bank manager himself. That isn’t hard, unless the bank itself is the one teaching you.
Further reading
- Financial education for children: money DOES matter
- 7 mistakes we make with our personal finances
- 5 steps to getting rich, by Charlie Munger, Warren Buffett’s right-hand man
Featured image: Martin Kraft, CC BY-SA 3.0, via Wikimedia Commons.
