Young people between 18 and 25 years old save to grow their capital (33%), finance their studies (22%) and to cover possible unforeseen events (20%), according to data from the BBVA’s 2019 Savings Barometer. A good financial education is key to saving and an illiterate society in this regard has a detrimental effect on itself and the economy of a country. «Several studies show that an improvement in financial trainingof the population improves behavior in aspects such as savings, retirement planning, the acquisition of financial investment products or the selection of credits, mortgages or refinancing, ”explains Elisabet Ruiz-Dotras, Professor of Economics and Business Studies of the UOC . For the expert, the way of understanding money and relating to it responds to the one that the reference people have moved us throughout life, mainly parents and teachers.
« Financial education must start in the family and must continue in schools, and should continue in college, because we constantly relate to money. As it is taught to recycle or a healthy and balanced diet, one should also teach the value of money, the different currencies and what are savings and investment, ”considers Ruiz-Dotras.
Tips for new generations
Save with a piggy bank. “It’s good that children learn to save from a young age, a good gift is a piggy bank,” says the expert. It is considered useful that since childhood they socialize with financial concepts and nomenclatures, and that by 6 or 7 years they begin to develop habits.
Reward the effort. Learning that there is an effort behind a monetary value is important. It is good to teach them to save by rewarding them with what promptly represents an effort for them. “It’s not about giving money because, yes, they have to learn to value it,” Ruiz-Dotras explains.
Count money. According to Ruiz-Dotras, it is important to teach them to count money from the piggy bank so that they know the value it has. Having the money in cash helps when they are little to understand it better and become aware of the money.
Open a savings account. “When they are somewhat older, it is good to have a savings account and for young people to understand that there is an effort behind this money,” he says, although he adds that “it can also be a gift on special occasions.” According to data from the Pisa in Focus newsletters of 2017, in Spain students who have a bank account have a better performance in financial literacy (with a score of more than 20 points) than students of similar socioeconomic status who do not have an account Bank
Talk about the temporary value of money. They have to understand that in the longer term there may be more performance. “The little ones and the not-so-small ones are often impatient and prefer a unit today than they like more than two units tomorrow. The young and the not-so-young must learn to be patient when we talk about money, ”explains Ruiz-Dotras. According to the expert, often when people see that some financial product loses money, they cancel it immediately instead of waiting, although perhaps it would be the best. This aspect is important mainly for new generations who are accustomed to immediacy.
Understand what the savings are for. «If you want something special it is important that you make use of that money; It is counterproductive to buy everything they want because then they do not give any value to the money or make any effort to obtain it, and, in the long run, when they are older, this can lead them to the habit of spending all the money, ”he says.
Make them part of the savings habit at home and at school. Primary socialization is important to set a good example, and the educational environment and home are good places. Ruiz-Dotras recommends that parents explain to their children how they save, just as in school there may be a piggy bank where they can save and use toy money.
Find creative ways to “earn” money. In schools, especially when studying mathematics, it is important to work examples in which money is added or earned instead of losing it. “This way you start programming your mind in a positive way about money,” he explains.
Understand what entails bad money management. “Parents should help them understand that misuse of money means they don’t have it when it’s needed,” he explains. One option is to have a prepaid phone to manage the use of money as they consume minutes knowing that it will last them a month. For Ruiz-Dotras, it is important because more and more are paid digitally, only 39% of Spaniards choose to pay their purchases in cash and millennials make 80% of card payments. “This phenomenon contributes to the loss of awareness of money and its value because we stop touching it, and therefore it is positive to look for alternative ways to develop this awareness,” he says.
Earn the pay, don’t give it away. “If you choose to give an amount to young people every week, this amount should be in exchange for some effort, it is not good that it is without reason,” warns Ruiz-Dotras. However, according to the 2017 PISA report, 80% of students earned money in the form of gifts. «Adults get paid in exchange for a job and that should also be learned by young people», Explains Ruiz-Dotras. It is important to teach them to manage that money throughout the week, to save if needed later, and, if they have run out of savings, they can be offered a “family loan” that they have to return . “In this way, the financial language begins to be known,” says Ruiz-Dotras, also a researcher at the UOC DigiBiz research group.