By Idris Seedat
While the modern consumer generally has a good understanding of finances, a host of obstacles have hampered their ability to save and invest. From the rising cost of living and a declining disposable income to a lack of savings and investment know-how, many are having to opt-out of progressive financial planning strategies.
This is especially concerning when considering the changes in consumer habits and financial products, making consumer financial literacy more critical than ever. According to the Intereconomics journal, financial literacy is positively related to ownership of a pension or shares. This is linked to a country’s economic growth, as it results in a more efficient allocation of savings and higher per rand returns, attracting more investment and growth.
Increasingly, educational experts are shining the spotlight on the importance of teaching financial literacy to children as a means to develop effective life skills to handle money, even from an early age. While the importance of teaching kids about money might not be entirely new – everyone remembers having a piggybank – this has significantly evolved in recent times. Educational programmes now include skills such as budgeting, managing personal finances, saving and investing. Historically, financial literacy has largely been overlooked at school level, but encouragingly the modern syllabus has changed to more future-focused learning and education.
A better future
It is not hard to imagine that 20 years from now, today’s children and tomorrow’s adults will be equipped with life skills that allow them to make good decisions and solve problems in their academic and professional careers, as well as in their personal lives.
Children who are introduced to financial literacy are likely to acquire many skills as they grow older and will begin to manage their money differently. Often, the skills that are being taught these days include budgeting, managing personal debt, dealing with setbacks and investing effectively to build personal wealth. Increasingly, financial literacy is taught with the aid of education technology, such as gamification, which engages learners and keeps them motivated.
The Johannesburg Stock Exchange (JSE), through programmes such as the JSE Investment Challenge, aims to create that future by providing the youth with the financial tools they will use in their adult lives.
Risk-free opportunity to trade
The JSE Investment Challenge is a game designed to teach high school learners and university students the importance of investing and the dynamics of the stock exchange. Through an ongoing safe, informative and engaging annual digital simulation, participants can put their investment knowledge to the test. The challenge equips participants with understanding of the fundamentals of investing, which promotes the research and strategising of issues associated with JSE-listed shares. The challenge’s reach and impact crafts lifelong interest and understanding into the dynamic and thrilling world of trade and investment.
The Investment Challenge relies on the concept of the gamification of education as a strategy to increase investing and trade engagement. By incorporating game elements into an educational environment, the challenge generates levels of youth participation and engagement, frequently produced through general gaming. Financial experts have called the emergence of trading platforms that enable learners to buy stocks as a great opportunity to get them curious and excited about personal finance; especially as markets continue to be more accessible to everyone.
Developing life skills such as financial literacy is becoming an increasingly important aspect of education in the digital age. This is because of the advent of e-commerce, remote work and independent individual contractors, among others, which demands individuals to become more responsible for their own financial planning and investments.
Growing wealth
The earlier someone understands how to invest, the better their chance of investing in the future. There is indeed power in starting early and it is important to keep the end goal in mind, whether this is the accumulation of wealth or securing a comfortable retirement.
Essentially, life skills provide children with an important foundation and the tools for development, including the ability for independent thinking and how to act in various situations. Developing life skills is a crucial part of being able to meet life’s everyday challenges, especially in our fast-evolving world. The significant changes in global economies over the past few years have been matched with a transformation in technology which impacts our education system, work and personal lives.
Idris Seedat is the Head of Transformation and CSI at the Johannesburg Stock Exchange (JSE).