Make Financial Literacy an A-Level Subject at MoneyTree AsiaPac - Developing Tomorrow’s Financial Geniuses

Make financial literacy an A-level subject
By Eugene Wee
October 27, 2008

I KNOW the A-level exams are just over a week away, so what I’m about to suggest may get some very heavy textbooks thrown at me.

How about we add another compulsory subject to the A-levels -financial literacy.

With the recent incidents of investors losing huge chunks of their savings to the failure of DBS High Notes 5 and Lehman Minibonds investment products, there’s no better time to relook whether we should make financial literacy a part of our school curriculum.

In a street poll poll of 100 people done by The New Paper earlier this year, nine out of 10 people believe that financial literacy should be taught in schools.

Last week, one reader wrote to The Straits Times Forum page advocating the same thing - that financial literacy be made a core subject in schools rather than being relegated to supplementary or enrichment lessons.

I think we should go even further - make it an examinable subject.

Even better, it should eventually become an A-level subject. I can almost hear the chorus of outraged parents now - why burden our children, who are stressed enough as it is, by making them study for yet another exam?

Why not just make it a non-examinable subject that they can just learn without having to worry about how to score another ‘A’?

Here’s why: If the subject isn’t interesting, it’s going to be a case of one ear in, one ear out.

For a teenager, financial literacy is about as juicy and interesting a subject as advanced thermodynamics.

However, learning how stock markets work, how unit trusts function, and how to diversify your investments at different points of your life are skills that everyone will need sooner or later.

Far more students will find themselves in need of this knowledge in their adult lives than, say, calculus and titration.

And by making financial literacy examinable, you force students to internalise the concepts that they will no doubt make use of later in their lives.

If we are made to learn about financial literacy, then maybe we won’t be caught in the situation of the many retirees who plonked their nest eggs into a single risky structured fund without knowing that they could lose it all.

This would have been covered in Chapter 3: Diversifying your portfolio, and Chapter 13: Types of investment products and how they work.

Others who were close to retirement would also not have put all their retirement savings in unit trusts, which have shed by half due to the financial turmoil.

They would have known that the closer you are to retirement, the larger the proportion of your savings should be in safer investments like bonds.

That would have been covered in Chapter 7: Asset allocation for retirement.

Of course, even then, students won’t likely be able to understand the inner workings of the Minibonds product. They won’t have to, as long as they know it belongs to a category of products that can be considered risky so that they can make more informed financial decisions in the future.

Studying subjects like chemistry and advanced mathematics may be all well and good because they teach you thinking skills.

But financial literacy is a life skill, something that’s not just nice for you to know, but something that you will need to know if you want to retire well.

Can’t say the same for trigonometry now, can we?