Financial capability is made up of several factors. The key elements are:
- Ability – focused on financial knowledge and skills
- Connection – our engagement with money and access to financial services and products
- Mindset – Our values and attitudes towards money
These three factors interact to influence a child’s financial behaviour. Research suggests mindset and connection are more potent drivers of a child’s financial behaviour than ability. We develop financial capability throughout our childhood and adolescence. However, we need more support to become financially capable adults.
Research has shown that financial capability is linked to what is seen, learned and experienced in childhood. Still, unfortunately, the skill of managing your money and understanding the value and worth of money needs to be taught at schools. More so parental actions and characteristics have a more significant impact on a child’s financial capability than explicitly receiving financial education in school.
Children who are more financially capable tend to have parents who role modelled financially capable behaviours at home, through explicit teaching (e.g. discussing where household income comes from, showing children how to check bank balances, discussing budgeting and goal setting), through demonstrating behaviours and through fostering their child’s connection with money through giving money to their child regularly and giving them the responsibility for spending and saving decisions.
The opposite is for children who live in homes with adults who have lower financial capability (or are struggling, squeezed or over-indebted), can have the likelihood of lower financial capability themselves.
Financial capability is an essential skill for children for several reasons:
- To develop healthy financial habits that can last a lifetime
- To make informed decisions
- To prepare for the future
- To avoid financial difficulties
During the launch of its second strategy in 2022, ĠEMMA has focused its efforts and approaches on encouraging financial capability skills amongst all cohorts during our life stages but more specifically within the age group from 3 to 18, where the focus has been on the needs of children and young people at home, in schools and the community.
Financial capability skills are core life skills, and it is essential to teach them to children as they develop financial capability from childhood to their teens and twenties so that they may become financially capable adults.
Over the last five Summers, ĠEMMA collaborated with HSBC Foundation Malta to teach concepts of financial capability and sustainability to children at several Skolasajf centres through different themes, such as the last Hero on a Budget competition. This latest competition saw over 2,000 children participating in 327 teams in creating Superhero costumes with a budget of €1.50.
During the 2022 – 2023 academic year, we launched the ĠEMMA Money Challenge, which is focused on the current situation in our surrounding world with the theme ‘Build your Future, Be Smart about Money’. We aim to encourage school organisations to participate in a healthy educational competitions to increase the awareness of financial knowledge amongst students and parents. The schools will compete against each other for the best creative and most impactful project, and the winners will be announced this month during Global Money between the 20th – 26th of March 2023.
This year apart from the Money Challenge, we will be reprising our Skolasajf programme to continue to teach children these essential life skills. We will also be launching new initiatives and tools aimed at building the relationship between parents – money – children through an innovative app called Karus and additional tools for teachers to support them in their approach to teaching children financial knowledge in a more diverse, fun and educational manner.
Financial capability is essential to help children navigate the complex financial world and build a secure financial future.