This article first appeared in The Edge Malaysia Weekly on August 28, 2017 - September 3, 2017
One of the more enjoyable parts about being a judge for The Edge Billion Ringgit Club’s corporate social responsibility component is learning what BRC members are doing to bring long-term, sustainable benefits to communities.
Many BRC members have chosen to support education, pouring a huge amount of money into scholarships, school improvement and meal programmes, and even infrastructure such as school buildings.
As the charitable arm of The Edge Media Group, The Edge Education Foundation (TEEF) has chosen to focus on two areas which are related to The Edge Media Group’s core business — publishing business news in English. These two areas are English proficiency and financial literacy.
English is the language of business, and proficiency in the language is still a passport to better jobs and opportunities.
Financial literacy, which the OECD International Network on Financial Education defines as “a combination of awareness, knowledge, skill, attitude and behaviour necessary to make sound financial decisions and ultimately achieve individual financial well-being”, is a life skill.
In many emerging as well as developed countries, there is growing concern about the level of financial literacy of citizens, especially the young. Financial literacy is increasingly being recognised as an essential life skill, and some countries have incorporated the subject into their school curricula.
Teaching young people financial literacy is critical as it would equip them to make decisions such as choosing a career or job, buying their first home, and planning for retirement — decisions that would ensure future financial well-being. Even something as basic as choosing a bank savings account today requires some level of financial knowledge because of the choices available.
The PISA 2015 Students’ Financial Literacy results released in May this year in Paris showed that while almost 60% of 15-year-olds surveyed had a bank account, and more than 60% earn money from some type of work, many could not recognise the value of a simple budget, or even understand a bank statement or a pay slip. Angel Gurría, the OECD Secretary-General, described this as “shocking”.
The OECD’s PISA or Programme for International Student Assessment examines what students know in science, reading and mathematics, and their ability to apply what they know. The 2015 financial literacy study that covered 15 countries and economies is the second on financial literacy, following on from the PISA 2012 results. Australia, Brazil, selected provinces in Canada and China, Italy, the Netherlands, the Russian Federation and the US were among those that took part in the 2015 financial literacy study. The Chinese provinces of Beijing, Shanghai, Jiangsu and Guangdong ranked first overall, with more than one in three students performing at the highest level (compared to the OECD average of one in 10). In these provinces, the most socially and economically disadvantaged quarter of students performed at par with the second wealthiest quarter of students in the US, and better than the wealthiest quarter of students in Brazil, Chile and Peru.
“PISA 2015 data show that students with high proficiency in financial literacy are more likely than those with low proficiency to be oriented towards saving, to expect to complete a university education, and to work in a high-skilled occupation,” said Gurría in his speech at the launch in May.
Malaysia was not part of the PISA 2015 financial literacy assessment but data on young people and their financial situation is a cause for concern. An Asian Institute of Finance (AIF) survey, titled “Bridging the Knowledge Gap of Malaysia’s Millennials” and published in 2015, paints “a picture of a generation that is on the road to financial stress with many of them living beyond their means, trapped in emotional spending and on the edge of a financial cliff”. The survey of more than 1,000 young professionals between 20 and 33 years old found that 38% reported taking out personal loans and 47% were engaged in expensive credit card borrowings.
Worse, 70% owning credit cards tended to pay the minimum monthly payment instead of settling the bills in full, and 45% did not pay debt on time at some point.
Data from the Insolvency Department backs up the AIF study. Between 2011 and 2015, about 24,000 Malaysians from Gen Y, defined as those below the age of 35, were declared bankrupt. This included almost 1,300 under the age of 25, meaning they started their working life with crippling debts.
This is the backdrop for TEEF’s “Money & Me: Youth Financial Empowerment Programme”, which was launched last year in five schools in Kuala Lumpur. Money & Me is a free financial literacy programme with two objectives: to equip youths with financial literacy as a basic life skill, and to equip low and lower-middle income youths with basic entrepreneurship skills to help them improve their economic prospects.
The programme, designed by TEEF with funding from Citi Foundation, is approved by the Ministry of Education as a co-curricular programme for Form 4 students. This year, about 190 students in eight schools in Kuala Lumpur and Selangor participated in the programme.
TEEF carries out Money & Me in collaboration with its partners Citibank, EY, GE, KLK Oleo, PwC, Methodist College Kuala Lumpur (MCKL) and the Rotary Club of Sentul. Volunteers from partner organisations (in the case of MCKL, students taking the Certified Accounting Technician course are involved) spend two hours every week or every two weeks in schools to facilitate the programme, which comprises five modules: Save, Spend, Earn, Grow and Give.
The volunteers and MCKL students teach Money & Me participants a range of topics such as the importance of saving; inflation and interest; differentiating needs from wants; credit cards; good debt, bad debt and bankruptcy; goal-setting and budgeting; and income and employment, including how to read a pay slip and income taxes. Participants also learn about the importance of investing and ways to invest and grow wealth, as well as giving back to society through a small business project which they are required to implement.
The programme culminates in Sales Day, a one-day event at a mall where participants market their products and services and vie for prizes in the Money & Me Young Entrepreneurs Challenge. This year, Sales Day will be held at 1 Utama Shopping Centre on Sept 16.
Our pre-programme survey showed that as in the PISA study, 60% of Money & Me participants this year have bank accounts. Through Money & Me, we hope that young people will be able not just to understand the value of a simple budget or read a pay slip, but gain the skills they need to make the most of economic and financial opportunities.
Dorothy Teoh is CEO of The Edge Education Foundation. The foundation welcomes enquiries from BRC members who are interested in becoming partners for Money & Me or TEEF’s programme to improve English proficiency. Email: [email protected].
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