Unit 3, Listening 2, Financial Literacy Among Young People

 Financial Literacy Among Young People

Speaker:              It was not my finest hour. Some years ago, my partner and I were invited into our bank manager’s office to discuss, in great detail, the truly remarkable elements of the mortgage we had applied for. As with Stephen Leacock, banks make me nervous, especially when forced to deal with numbers in the six-figure range. The manager began talking about amortization[1], monthly payments, accrued[2] interest, payment speed-up, principal and interest combinations, and so on. My partner began to question him. She was very good.

I suddenly found my mind drifting. I looked out the window. I tapped my feet. I wrung[3] my hands. I blinked furiously. Quietly and inevitably I fell asleep. I nodded off. After what I guess was a moment or two, a sharp dig in the ribs. “Wake up,” she said. “This is important.” The bank manager couldn’t believe that I had fallen asleep. But it was important. A house is, after all, the largest purchase most of us will ever make. But talking about money I find can be tedious beyond measure. The reason for that is simple: I am a financial illiterate. I take no comfort in the fact that there are millions like me who don’t understand the first or even the second thing about finances. I never have.

Once, as a member of the editorial board of a large newspaper, I had to sit through a lunch with the sitting finance minister. Every other member of the board was asking about trade deficits and current accounts and so on. The editor asked me if I had a question for the minister. I said, “What is the difference between fiscal[4] and monetary?[5]“ The finance minister, Edgar Benson at the time, took a drag on the great log of a pipe and rolled his eyes.

I was reminded—as if I had to be reminded—of how badly I deal with things financial when I read a piece in Forbes magazine entitled in bold letters, FINANCIAL ILLITERACY IS KILLING US. The story described the great canyons of ignorance about financial matters among teenagers. Said the writer, quote, “That teenagers are allowed to drive, vote, and parent, all while not knowing the difference between an asset and a liability[6], is nothing short of a travesty[7].” End quote.

While the article naturally focuses on the United States, there are elements which echo the situation in Canada. In the US, efforts to improve financial literacy target high school students, but even there surveys have shown that what is learned lasts a maximum of two years. I was taught nothing about money during a less than distinguished high school career. Nothing about mortgages, interest, pensions, profits, investments, insurance—nothing. Neither were my children.

I spent a lot of time in the chemistry lab doing God knows what. I sat through long descriptive explanations about physics and algebra, but nothing about personal debt or savings plans. The closest I came to understanding anything at all about money was a weekly allowance[8] and opening what was called a Christmas Club account at our friendly local bank. And of course, learning to play Monopoly, probably the greatest financial educational tool ever created.

When I started a working life, my dream was for a salary of $10,000 a year and buying a house for $25,000. But I still didn’t know the difference between a stock and a bond[9]. Which is why it is encouraging to learn, as I did this week, that the Canadian government has an agency called the Financial Consumer Agency of Canada. It was set up in 2001. Part of its mandate[10] is to oversee the operations of financial institutions, but part of it is to expand the financial literacy of Canadians.

It has held national conferences on the subject and conducted surveys on various levels of financial literacy. It issues reports from time to time. It even has its very own financial literacy month: November. As it points out on its website, financial literacy is critical to the prosperity[11] and financial well-being of Canadians, and it is never too early to start acquiring it. Schools in Ontario have started to talk about money to children in elementary school, usually around grades four and five.

A series of surveys across the country shows that the financial literacy among young people is very low. For example, 95 percent of young people interviewed knew what a budget is, but only 20 percent knew how to stick to it. Nearly 55 percent of teenagers say they wouldn’t pay off their credit card balance every month. And nearly 40 percent of students said that how to save money was the most important topic in the school curriculum.

Now, if I had gone through a rigorous course in financial literacy and management, I might now be in a position where I could balance my checkbook. Or . . . probably not.


[1] amortization: noun paying back a debt by making small regular payments over a period of time

[2] accrue: verb to increase over a period of time

[3] wring: verb to twist and squeeze

[4] fiscal: adjective connected with government or public money

[5] monetary: adjective connected with money

[6] liability: noun a person or thing that causes you a lot of problems

[7] travesty: noun something shocking or offensive

[8] allowance: noun money that is given to somebody regularly

[9] bond: noun an agreement by a government or a company to pay you interest on the money you have lent

[10] mandate: noun an official order given to somebody to perform a particular task

[11] prosperity: noun the state of being successful, especially in making money

Comments

Post a Comment

Popular posts from this blog

Unit 5, Listening 1, Part 1: Urban Settlements

Part 1: Urban Settlements Narrator:        Almost 180,000 people move into cities each day. And now, for the first time in human history, the majority of the world’s population live in urban settlements . Urban settlements can be as large as megacities like Tokyo in Japan, with 35 million inhabitants . . . or as small as the city of Canterbury in the United Kingdom, home to little more than 40,000 residents. And yet, they have many similarities. Every urban settlement has a central business district in its historic core . This trading district is always situated where several main roads meet, and is the primary location for shops, offices, restaurants, and entertainment. High land value means few people live here. This is the main difference between the central business district and other urban zones. During the Industrial Revolution, many towns experienced a massive [1] influx of industry workers. These workers and their families ne...
Read more

Unit 7, Listening 2, Change Is in the Making

Change Is in the Making Kevan Gilbert: Welcome to Change is in the Making , Domain7’s podcast where we explore all things digital through the lens of purposeful change. I’m Kevan Gilbert. Veronica Collins: And I’m Veronica Collins, and together, we’ll be discussing themes of connection making and culture shaping. We’ll be delving into [1] how to create meaningful change from a business standpoint and a human perspective. Gilbert:           Today, we’re looking at the exploding reality of quote, unquote “digital transformation.” . . . Collins:           But I saw somebody call it a digital revolution the other day instead of digital transformation, and that really seems to ring true, that we’re living through, in the same way that the Industrial Revolution [2] completely reorganized people’s lives. We’re living through a digital transformation in that way— Gilbert:   ...
Read more

Unit 6, Listening 2, America’s Magnet for Innovation and Investments

America’s Magnet for Innovation and Investments Renee Montagne, Host: Think of the most technologically innovative companies of the last 50 years—Intel, Apple, Google, Facebook, Twitter. Each one has a Silicon Valley address, and each one got backing from venture capitalists . Over the last decade, more than a third of the nation’s venture capital has gone into Silicon Valley, and much of it has come from there, as well. In our series on the history of Silicon Valley, NPR’s Laura Sydell has this story on how venture capital and high tech grew up together. Sydell, byline: When tech entrepreneurs go looking for money, they can easily end up here: University Avenue in downtown Palo Alto, with its clean brick sidewalks and high-end boutiques. Bill Reichert is a venture capitalist. Reichert:       Within five blocks of here, there are probably between 30 and 40 venture capital firms. And there are probably also about 30 or 40 start-up companies that have b...
Read more