Consumer Finance Education — Do we understand the financial needs of young people?

I was recently asked by a young person in Grade 10 a question that got me thinking. “Why can’t ATMs give you coins?” I was momentarily stumped… I proffered a technical answer, “It’s not practical for ATMs to have coins because of the complexity of storing and dispensing them, they are made for notes”. Rather dismissively I added, “What can you buy with coins these days anyway?” The person then explained further why she had the query, “Sometimes you only have R22 in your account and you need just R2 but the ATM will not give it to me, what can I do?” We chuckled about the problem and the conversation moved on, but on further reflection the question had captured a problem that a young person faces when trying to bank. The interaction made me think,

“Do we understand the needs of young people when it comes to personal finance and banking? Do our attempts at financial education serve them, and most importantly do the products and services that financial institutions provide serve them?”

The young person had a problem that she faced, she needed to make a withdrawal that was below the ATM limit of R20 or R50 yet she needed a bit of cash for transport money. In most definitions of “financial inclusion” we would consider her included because she had a bank account, however, the account was preventing her from transacting and was not meeting her needs. One option available to her was to go “old school” by finding a branch and the (human) teller within. But this would attract a charge from the bank! So she faced the prospect of not being able to access her R2 without losing some value from the transaction.

This was an example that highlighted the limitations of financial inclusion (especially at the bottom of the pyramid) and when it could lead to economic exclusion.

The interaction further challenged me to think about the financial literacy education that I provide. Much of this work includes interaction with participants to allow them to better connect with the current personal financial system. In most courses financial education teaches you to budget, to save (Happy Savings Month South Africa!), and to beware of credit. Although well-meaning, many initiatives are designed by those in the know to explain terms THEY believe need explanation.

Within the interactions we have in financial education we fail to understand how the financial system is also not working for people. What do people know? What parts of what they know should be challenged? Most importantly, let’s understand what do they NEED? Those elements should form the basis of all our financial literacy work.

There are a plethora of little understood and misunderstood financial situations that we do not help the young and old to understand simply because we do not even ask them to share with us.

For the sake of building an industry with more impact, let us challenge each other as financial educators to change the paradigm in the work we do.