BarcelonaAccording to the latest PISA report on financial literacy According to a 2022 OECD report, fifteen-year-old students in Spain are below the European average in financial literacy, and 17% do not even reach the basic level of financial competence. Financial literacy levels among adults are also low. Laura Mascaró, author of the book Where does he keep the money?She recommends that adults be aware of their relationship with money and whether they have bad habits: "Children learn from what they see at home; they are influenced by their parents' perception and management of money," she says.
Week yes or no?
A weekly allowance is a useful tool for financial education. Depending on the children's abilities, it can begin with symbolic amounts—1 or 2 euros—around the age of 6 or 7. "When they are able to perform simple arithmetic calculations, add and subtract, they can already manage their money," explains Jordi Martínez-Llorente, financial advisor and director of financial education at the Institute of Financial Studies. Some families choose to give an allowance based on whether their children perform chores around the house or behave appropriately, but Martínez-Llorente believes that their responsibility to help at home is independent of the allowance: "If we were to lose our jobs, we wouldn't be able to give them an allowance, but they should still contribute with their assigned tasks." Regardless of whether the allowance is tied to specific responsibilities, financial learning requires children to make decisions about what to buy and what not to buy, and to understand what saving entails: "It's a transfer of money and responsibility."
Books and games
There are several resources designed to help young children understand what economics is and begin to familiarize themselves with personal finance.
Finnelis . A board game about family finances created by the Institute of Financial Studies and the publisher Kidnelis, where the winner is the one who achieves a good balance between financial and emotional well-being after completing 30 squares that simulate a month. Designed for ages 7 and up, to teach basic concepts related to a family's daily expenses.
Money Academy and the Fountain of Eternal Wealth and Money Academy and the Money Making Machine by Natalia de Santiago (Editorial Destino, 2024), are part of a collection to understand how the economy and finance work through the adventures experienced by Carlos and his friends.
Where Do You Create Your Money?: Learning to Manage Your Money from Your First Paycheck by Laura Mascaró (Montena Publishing, 2019). It provides the keys to understanding what money is and learning to manage it from your very first paycheck.
How and why?
It's important to agree from the beginning on how the money can be used. It's usually for leisure activities that change as they get older, from trading cards and sweets to snacks with friends, movie tickets, gifts for friends, or even paying off their phone bill. "It's good for them to have some freedom to decide. They also learn the importance of thinking about the future, even if it's not immediate," notes the financial advisor. Natalia de Santiago, a financial educator and expert, adds that it's necessary to find a significant amount that allows them to save but isn't excessive, so they have to manage it responsibly. And whenever they want to buy something expensive, they should consult their parents.
As children get older, the allowance increases, and may even be adjusted according to the Consumer Price Index (CPI), thus introducing them to financial concepts. To learn how to manage money, experts recommend giving an allowance weekly when they are younger and then at the beginning of the month when they are older. It is more difficult to control spending when paying electronically than with cash. "Therefore, it is better to start with coins and bills to be more aware of what is being spent and later switch to cards to also understand what fees and other concepts are that will remain relevant in adulthood," suggests the financial educator. Mascaró adds that it is important to realize that money is finite, and there comes a point when excessive spending is no longer worth what is received in return.
Financial education in schools
Since 2012, the Institute of Financial Studies has been promoting Financial and Entrepreneurial Education in Catalonia (EFEC) , which can be delivered by teachers (who receive the materials) or by volunteers from the financial and insurance sectors, officials from the Catalan Tax Agency, economists, auditors, or registered financial advisors. These one-hour financial education workshops are structured in independent modules, and the school decides which ones to offer. There are eight modules: Managing Your Money, Going into Debt? Wisely!, Smart and Sustainable Investing, Taxes and You, Finances for Life, (In)form Yourself to Decide, Are You Sure?, and The Circular Economy. Participation, which is free, is designed for 4th-grade students, but in recent years, schools have decided which grade level would be the best fit.
Learning from a young age
"When they're little, they think money is infinite; you can pay for everything with a card, or you go to the ATM and get as much money as you want. The sooner they start to understand what money is, the better," says Laura Mascaró. She suggests taking advantage of the fact that they're often interested in money from a young age because it allows them to get things they like. She maintains that it's better for them to make mistakes when they're 7 years old and have to manage 10 euros than when they're adults. She proposes that children start by paying with money when they go shopping, receive the change, and check that it's correct: "Everything is very manipulative; it's better to start with physical money." Mascaró recommends shopping in physical stores, having them look around, write down what interests them and its price. Reviewing the list before buying helps avoid impulse purchases and helps them realize that perhaps they're no longer interested in it as much, or perhaps they still want it: "They have to learn to think and decide before making purchases, exploring alternatives like waiting for sales, buying secondhand, or other brands. Habits that they will gradually incorporate." They will also realize that there comes a time when excessive spending does not compensate for what is received in return.
Where do we begin?
Natalia de Santiago, a financial communicator and finance expert, says that financial education is simpler than it seems if you take these basic pillars into account:
1. Start by educating yourself. This training will also help those around you learn. Even when you're not consciously educating others about finance, you're still educating them.
2. Habits are important. If you want to actively educate, start by instilling healthy habits that can be developed with simple tools like an allowance or a piggy bank that allows them to save gradually or delay gratification. Basic things that, when used correctly, create fantastic habits for future adults.
3. Learn gradually. Start with small amounts and gradually increase both the amount and the number of options it covers, so that it increasingly resembles your adult life. Initially, the allowance is weekly, then monthly. The payment method also varies, from physical to prepaid card, then to debit card, and later it can be integrated into your mobile phone.
4. Don't rush. Financial education relies on consistency, taking it slow and steady. It's important to follow each step gradually, helping children understand that money is a limited resource and requires effort, while also being careful not to burden them with worries that are typically handled by adults.
5. Talk about money at home. It's essential to discuss money at home and talk about current events. The family should be a point of reference they can consult, a place where they feel comfortable asking questions. We can guide and inform them. If the family doesn't do this, they'll look elsewhere and may encounter many unreliable offers promising impossible things. If we don't know the answer, we can find it together. They need to develop a critical mindset, learn to discern reliable information, and not be swayed by what they see on social media.
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