Growth & Jobs | Financial education more relevant now in post-pandemic era

Michael A. Collins, manager of the Youth Banking Unit at JN Bank, says increased financial knowledge among Jamaicans will play a pivotal role as persons seek to recover from the economic shocks of the COVID-19 pandemic.

He noted that one of the most dramatic effects of the pandemic has been the increase in the number of people in situations of financial vulnerability.

“This, coupled with the recent rise in inflation and the overall cost of living, worsened by the Russia-Ukraine conflict, has certainly put a strain on the pockets of all Jamaicans. The reality is that many of us are still grappling with the fallout from COVID-19 and struggling to get back on our feet,” Collins said.

With April being observed as Financial Literacy Month, Collins said it is an opportune time to focus on educating more Jamaicans about ways they can improve their financial IQ, and in so doing, provide them with the knowledge necessary to recover financially and to maintain a positive financial outlook going forward.

He pointed out that numerous studies show that financial literacy has a positive correlation with financial behaviour.

“Once we can increase the financial literacy levels of our population, which now stands at less than 50 per cent, then over time, we can hope to see a change in the financial behaviour and choices of our people,” he stated. “This means that persons will begin to make better financial decisions and will be better able to understand simple, and even complex financial concepts.”

The JN bank manager explained that to be financially literate is to know how to manage one’s money. “This means learning how to pay your bills, how to borrow and save money responsibly, and how and why to invest and plan for retirement,” he said.

“Managing your money is a personal skill that benefits you throughout your life – and not one that everybody learns. With money coming in and going out, with due dates and finance charges and fees attached to invoices and bills and with the overall responsibility of making the right decisions about major purchases and investments consistently, it can be daunting.”

He noted that it is a skill everyone should learn and from as early as possible. “Handling your finances the right way should be a priority, and it should drive your daily spending and saving decisions. It is important that persons take the time to learn the basics, from how to manage a chequing or saving account to how to pay your bills on time and build from there. Managing your money demands constant attention to your spending and to your accounts and not living beyond your financial means,” he advised.

Teach financial literacy in schools

Collins further reiterated the call for financial literacy to be added to the curriculum of more schools in Jamaica to give young people a head start to financial success.

“We need to expose our young people to simple concepts such as budgeting, saving and investing to more complex ideas such as interest, compounding, inflation, diversification, and bond prices,” he stated.

He remarked that personal finance education should start early at both home and school.

“Ideally, personal finance concepts should be taught in primary and high school and should continue into college or university. In mathematics, you start with counting, move on to addition and subtraction, and then move on to division and multiplication. You need to learn letters before you can read. In the same way, personal finance education should be a cumulative process, with age-appropriate topics taught each school year,” the JN Bank manager advocated.

He pointed out that the reality is that many persons are not provided with any substantive personal finance education until they are way into adulthood. “At that point many people would have already made countless mistakes with their money, and oftentimes, those mistakes take years to repair,” Collins said.