3 Reasons 21 Nations Teach Kids About money

The financial literacy movement is turning into a global tsunami, and while a lot of activity is taking place in the U.S. our energy and effort is being matched or outstripped in other countries.

According to the OECD (Organization for Economic Co-operation and Development), 21 nations have begun to integrate financial education into their school curricula. Here they are:

·Armenia

·Australia

·Canada

·Czech Republic

·Colombia

·Estonia

·Germany

·Hungary

·Iceland

·Ireland

·Italy

·Japan

·Korea

·Malaysia

·Netherlands

·New Zealand

·Poland

·South Africa

·Spain

·U.K.

·U.S.

It's nice to be part of this club. But it would be even nicer to lead. We can't really tell who is out front when it comes to teaching kids about money because the OECD doesn't track spending per pupil on financial education, and neither does anyone else evidently. If you know of a reliable source, please share it with me and I'll pass it along.

What we do know is that Australia, New Zealand, the U.K. and Canada are moving much faster than the U.S. toward a national mandate to teach and test personal finance in elementary and high school.

Financial education seems to be gaining traction in Germany. In her blog, Annamaria Lusardi, the Dartmouth professor and head of the Rand Financial Literacy Center, shares six questions that a reporter from Germany posed, as well as her answers.

That the reporter was reaching across the Atlantic for answers testifies to the quality research we're doing on this subject in the States. But policymakers and educators now have in hand some 1,400 studies on financial literacy and education. It's time to move from research to action.

Why is it so important to start teaching kids about money? I'll let Lusardi answer. These three points are from her blog:

· The pension system Pensions have been shifting from defined benefits to defined contributions. Thus, workers are now in charge to decide how much to save and how to allocate their pension wealth. Moreover, when they retire, they will be in charge of deciding how to decumulate their pension wealth, and for example whether to annuitize or to take their pension as a lump sum, a very difficult decision with important consequences for financial well being after retirement.

· Financial markets Consumers are confronted with much more complex financial instruments than before; consider for example adjustable rate mortgages or mutual funds that invest in foreign markets.

· Opportunities to borrow The opportunities to borrow have increased dramatically. One of the features of credit cards and sub-prime mortgages is that the responsibility of how much to borrow is entirely in the hands of borrowers. One can borrow a very large amount on credit cards simply by using more and more cards. Similarly, with sub-prime mortgages, banks were not looking anymore at balance sheets and deciding whether borrowers could afford the loans, it was the borrower's responsibility to decide the amount to borrow. In this situation, it is very important that the borrower is financially literate and understands, for example, interest compounding.

In short, individuals around the world are increasingly on their own when it comes to providing for their financial security. Governments, unions and employers that once all but guaranteed we'd live happily ever after no longer have our backs. This is new. It wasn't the case when boomers were kids. That's why it's so difficult to stir action. That's why it's so important that we get started now.

Photo courtesy Flickr user migueloks

More on MoneyWatch:

· 3 Steps to Teach School Kids About Money

· Financial Education: How We Got Here

· Financial Education: How We're Missing the Boat

· Financial Education at School: Is It a Pipe Dream?

· Taking Financial Education to the Next Level

Dan Kadlec

Daniel J. Kadlec is an author and journalist whose work appears regularly in Time and Money magazines. He is the former editor of Time’s Generations section, which was written and edited for boomers. Kadlec came to Time from USA Today, where he was the creator and author of the daily column Street Talk, which anchored the newspaper's business coverage. He has co-written three books, including, most recently, With Purpose: Going from Success to Significance in Work and Life. He has won a New York Press Club award and a National Headliner Award for columns on the economy and investing.

Disclaimer: The copyright of this article belongs to the original author. Reposting this article is solely for the purpose of information dissemination and does not constitute any investment advice. If there is any infringement, please contact us immediately. We will make corrections or deletions as necessary. Thank you.