Having security in the actions we take is fundamental to moving fully, daily, between the various planes of life – family, social, professional and financial – without being subjugated to a constant fear that the world will befall us at any moment. But when this security is based on false premises, then we run the risk of leaving the door wide open for opportunists to pass through, or even promoting a kind of self-sabotage ourselves.
This applies to all types of situations, but when personal finances are at stake, the mistakes that can be made, sometimes carelessly, have consequences that can become impossible to correct, with immediate losses, possibly irrecoverable and, at the limit, in more serious cases, dramatic due to the way they impact our standard of living.
This comes with the purpose of a study released this Monday, March 16, by Banco do Portugal, presenting a set of data (focused on 15-year-olds) that should deserve very careful reflection both on the part of financial institutions and on the part of the school community and guardians. The study, in which 4,075 Portuguese students participated, reveals that 15% of 15-year-olds do not have the minimum knowledge and basic skills in financial terms and, more worryingly, that among those less prepared, 74% of those interviewed consider themselves capable of managing their money. Which, warns the BdP, reveals an “excess of confidence that increases the risk of ill-informed financial decisions”.
One of the sources of the problem is the fact that, today, young people practically do not handle physical money, even in a school environment, where the funds they need for small purchases are deposited on cardboard. Then, financial illiteracy begins with the parents themselves, who are also unprepared to understand the risks associated with investments or even basic concepts of savings (the same BdP study shows that only 13% of those interviewed in Portugal reach the essential level of financial knowledge).
The truth is that at the age of 15, students, in the classroom, have already had some contact with the importance of good money management, first through the Citizenship subject (which introduces the notion of savings) and, later, in the 3rd cycle, within the Financial Education subject, which already covers slightly more complex topics, such as interest rates, insurance, family budget and others.
However, the updating of these programmatic contents must be questioned. For example: what is the point of teaching a young person at the age of 14/15 how to fill out an IRS declaration and not even slightly touching on current topics that come across on social media such as cryptocurrencies, ETFs or NFTs? It is in this mismatch between what is taught and what reaches young people on their cell phone screens – from illegal casinos to millionaire lifestyles. influencers pseudo experts in finance – which is rife with the danger of uninformed decisions.
Knowing that your children have taken some Financial Education classes may give parents some comfort, but there it is: it is a security with fragile foundations. Therefore, there is nothing like having a more active role. Small steps such as, for example, even with supervision, letting the youngest ones make purchases at the supermarket, selecting essential goods, comparing prices and making payments. Later, they will thank you.
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