Research shows that confidence is shaped by the age of 5 and adult money habits are largely defined by the age of 7. It all comes down to building a skill set for life. We must explain that “money doesn’t grow on trees” and “money in a piggy bank is great but cannot grow”. So, we need to teach children to earn before we teach them to spend (we often do the opposite!) and we need to teach them why they need a savings account, explaining the concept of interest rate and compound interest.
In Switzerland, which is one of the leading financial places in the world, roughly 4 out of 10 adults do not fully understand basic notions of interest, inflation and risk diversification. There is a gender lens to it but there also is a generic question of financial literacy and the role parents have to play for this to improve.
Basic financial education is – and must be - in the hands of parents. We often think that this is a subject that needs to be treated at school, but this isn’t how it works. Before entering school, children need to have learned basic money skills. Children learn by observing their surroundings and they observe their parents handling money on a daily basis. So, parents are the real role models. Teachers at school teach them maths, languages, and other skills but teachers do not interact with money in front of children.