Financial literacy should be compulsory for high-school students, academic says

Financial literacy classes should be compulsory for all secondary school pupils to give future adults the necessary life skills, an academic advising the government on the issue told the Cyprus News Agency on Friday.

Andreas Milidonis, associate professor of finance at the University of Cyprus is also a member of the ad-hoc committee charged with drawing up a national strategy to promote financial literacy.

He said classes at secondary schools need not involve a lot of mathematics but be simple, focusing more on concepts such as consumption, savings, inflation, interest rates, borrowing as well as decisions on professional orientation and investments in further education.

Irrespective of how good an individual may be in their specific area, they still need basic knowledge to deal with personal finances, start a company or take out a loan. “We are not offering this knowledge to our people,” he said.

This knowledge is needed even more by individuals who finish technical school, learn a skill, and then enter the labour market directly and are obliged to create their own business to manage their income and expenditure from their profession.

The most recent central bank study, completed in February 2019, had shown that it was people who had had no contact with the issue during their education that had the biggest problems with financial literacy.

It also showed Cyprus comparing badly compared to other countries in the European economic area.

Young people aged 18 to 29 had lower marks in all the categories. Women fared worse in financial literacy than men, with the gap particularly noticeable in those aged over 50. But women also appeared to be more open to training and information than men.

Being economically active plays a big role in the levels of financial literacy while a high level of education was also linked to financial literacy. The type of studies at secondary schools also played a role, while wealth translated into higher marks in financial literacy.

Melidonis said the university could help train teachers to offer such classes in cooperation with the University of Cyprus and the CFA Society here when the university provides the syllabus and other material from countries such as England that have similar programmes.

Some financial concepts could also be introduced in primary schools through examples in existing classes, he said noting that Canada has a special programme for this age group.