Mastering the art of saving is about more than just setting aside a portion of your paycheck. It requires a solid understanding of financial management and the ability to make informed decisions about spending, saving, investing, and borrowing. Unfortunately, financial knowledge is not second nature for most people, making it difficult for them to effectively manage their finances.

According to Standard & Poor’s Global Financial Survey, only 33% of individuals worldwide are financially educated. This number is far lower in Pakistan than the global average; with barely 13% of the population holding a formal bank account. More than half (53%) of the adult population in Pakistan is financially excluded, according to the “Access to Finance” survey conducted by the State Bank of Pakistan (SBP) in 2015. Financial exclusion, as defined by the SPB, is a need for more access to formal financial services such as payments, savings, credit, and insurance services that are of sufficient quality to meet their requirements with respect and dignity.

In this regard, only 2.4% of the population has access to credit through the more traditional financial institutions. The majority of Pakistanis are still unfamiliar with financial management ideas such as budgeting, saving, and investing. As a result, many Pakistanis lack fundamental skills related to money management and financial planning.

With Pakistan ranking #16 out of 26 countries with the lowest financial literacy rate, this has become a nationwide problem, especially when over 63% of the population is under the age of 30. When compared to other countries, Pakistan scores poorly on many measures of financial inclusion, particularly those related to savings and investment. In this context, bolstering public trust in financial institutions through increased financial literacy may encourage people to save more money and make more investments in the long run.

The impartment of financial literacy should begin at a very early age. Research shows that children’s financial attitudes, habits, and norms form between the ages of 6 and 12. These behaviors, whether positive or negative, are reinforced and maintained over time, having a long-lasting effect on their own lives and those related to them.

As a young girl growing up in a low-income village in Pakistan, Sarah always felt the weight of financial insecurity. Like many other families in her community, her parents were struggling to make ends meet. It wasn’t until Sarah left her village to attend university that she had the opportunity to take a course on financial management. She was immediately struck by how much she had been missing out on by not having a basic understanding of financial concepts earlier in her life.

Looking back, Sarah wished she had been given the opportunity to learn about financial literacy at a younger age. “I strongly believe that if a basic financial management course had been introduced in my village’s primary or secondary school, I could have helped my parents with their financial problems much sooner since they weren’t educated,” she said. “I’m grateful for the education I received at university, but I wish I had learned about these important concepts earlier in life.”

There are millions of such stories in Pakistan that hint at a need for change in the education system. Government and other entities have a key role to play in making financial knowledge accessible to the public, starting from basic-level education.

Considering the need to improve financial literacy amongst the masses, the State Bank of Pakistan took the initiative to support and enhance the financial literacy ecosystem in Pakistan; the National Institute of Banking & Finance (NIBAF) launched National Financial Literacy Program for Youth (NFLP-Y) at the behest of the State Bank of Pakistan.

NIBAF conducted thousands of face-to-face training sessions in more than 68 districts of Pakistan, reaching 1 million students and 0.6 million using online platforms i.e., PomPak which highlighted the importance of financial education. NFLP-Y’s overall experience highlighted that financial literacy in children can be substantiated by the fact that financial attitudes, habits, and norms have been developed between the ages of 13 and 18 (grades 6 to 12). Therefore, children must be taught about good money habits from an early age.

To address this need, the National Institute of Banking and Finance hired the services of the Pakistan Alliance for Early Childhood (PAFEC) to develop financial literacy (FL) curriculum to be included in the National Curriculum from grades 1 to 12.

How did PAEFC go about developing this curriculum?

First and foremost, the PAFEC team first created a Financial Literacy curriculum development template based on the framework of the National Curriculum for selected subjects at the primary and secondary levels. The curriculum was then developed around 12 pillars of financial literacy: Money, Expenses, Income, Purchasing, Savings, Banking, Investment, Financial Planning, Financing, Entrepreneurship, Inflation, and Insurance.

To ensure the curriculum was effective, the PAFEC team took inspiration and ideas from the standalone courses of the National Financial Literacy Program for Youth (NFLPY) and the State Bank of Pakistan. They also looked at the existing National Curriculum for financial literacy integration and used examples and best practices from South Asia and South-East Asia. The consultants used this information to create a matrix-based curriculum that suggested ways to improve financial literacy in the current curriculum.

After receiving feedback from NIBAF and subject specialists, the PAFEC team finalized the curriculum. They made sure that it was consistent with the central goal of the NFLPY and that the curriculum and pedagogical approaches were in line with the national learning framework on financial literacy standards. The guidelines for the curriculum were designed to make it interesting and engaging for students, relevant and efficient for instructors, parents, and students, and in line with the school curriculum.

An improved National Curriculum with the incorporation of courses related to financial literacy will be a crucial step in equipping the next generation with the skills they need to become financially independent. Financial knowledge lays a foundation for students to build healthy financial habits from an early age and avoid many of the mistakes that can lead to lifelong financial problems.

Student financial literacy goes beyond just making sensible financial decisions. The inclusion of financial literacy skills may cultivate healthy habits that spread to their families, communities, and ultimately the nation. This tendency will alter the poisonous money culture and establish a new norm; one child at a time.

“It’s not how much money you make, but how much money you keep, how hard it works for you, and how many generations you keep it for.” – Robert Kiyosaki

Copyright Business Recorder, 2023