You've probably heard of financial literacy, but have you ever thought about what it really means?
I was recently exchanging emails with an acquaintance who told me how confused she was because there is so much talk about financial literacy, but no one ever defines it correctly, nor does anyone ever help us teach it to our children. The growing concern of many parents is not only how to make them financially successful but also financially literate.
Being financially literate means making informed and effective financial decisions, including knowing when and from whom to ask for help.
Ironically, the education system rarely teaches our children how to practically manage income and spending.
Moreover, in today's technologically advanced world, cash is becoming invisible and talking about money is taboo for many families, leaving little room to answer our children's questions about day-to-day transactions.
On a positive note, one of the principles I particularly value in the education system in the country I live in, Switzerland, is self-reliance. And yet, while children are taught to be independent, direct and vigilant about external risks as they walk to and from school every day, there is no one systematically teaching them how to prioritize their cash spending.
True self-reliance comes when an adult and a child can understand the concepts of spending, saving and giving, so that they feel truly free and not just consumers.
Traditionally, as parents, we have encouraged our children to become educated through reading, writing, and shared conversation. Why not also promote financial literacy? By integrating general concepts about money, exchanges and values into the subject matter.
