Giving kids the freedom to innovate.

In my Breaking poor money habits: bringing financial literacy to the classroom article, I discussed some of the implications of a financially illiterate society. We talked about the ramifications of an assumed financial education, and started exploring the idea of standardising this educational experience by bringing it into the classroom.

With such a discussional foundation laid, I’d like us to delve deeper into the transformative effects of a financial education in the way early insight can shape our appetite for risk, resulting in more innovators.

As adults we can often be viewed as steadfast and entrenched in our daily operations. A lot of us are the result of the system, or in some cases several systems, as we were passed from one educational institution to another. The output was a degree or two, a sound job, and a fulfilling, although rather risk averse life. For a lot of us, our lowered appetite for risk meant that our preferred jobs were ones that revolved around certainty. Certainty of income, both in increasing amount and regularity. Certainty around hours worked, input expected, and job title held.

This remains the preferable path for the majority to take when considering tertiary education and a career afterwards, and for sound historical reason. But there is another option. A path less trodden, and lined with uncertainty. This is the path of an innovator.

The innovator is someone who shapes the future through the introduction of new ideas, products or processes. An innovator walks to the beat of her own drum, and is often categorised as risk-loving. And with risk comes rewards. We all know that innovation is the key propellant to advancing forward, however this is not a trait embodied by majority. It is not a trait we nurture in our young, and it is not a trait that can be easily possessed by reading textbooks.

Innovation, or to innovate, is an innate sense that I believe lives within us all. Overtime layers of regulation and routine can bury it, but it is never more evident than in our youth. We see this as evident with children using Banqer (if you’re unfamiliar with Banqer, I would suggest reading my previous article). There is one aspect of Banqer in particular that brings out this trait, and that is the concept of company formation. When given the freedom to form their own companies, children as young as eight are engaging with the task and coming up with some extremely innovative ideas. Firstly, to elaborate more on how this plays out in the classroom; through Banqer students have a classroom currency which can be distributed amongst one another, and also by their teacher. Classroom chores can be transformed from mundane tasks into classroom jobs that students set up companies to manage. A really clear example of this is a ‘Jordy’s Chair Stacking Co.” This is a company set up to employee students to stack the chairs at the end of the school day. Prior to integrating Banqer this was a classroom chore, now it’s an employable job where students are earning Banqer dollars for completing the task. Often these are funded by the teacher, but in some instances children will transact with one another. A good example of this is the ‘Proofreading Company’ that we see popping up in several Banqer classrooms.

Chair stacking and proofreading is nice, but we can’t really tag them as innovative. There are however a long list of less traditional offerings we see starting up in Banqer classrooms. From one particular Christchurch based classroom alone we saw ‘The GPC’, or ‘The Gaming Prevention Company’ whose employees monitor the productivity of their peers whilst using their classroom devices. ‘The M Company’ have built up a reputation around setting a calm and self-reflective classroom environment through playing relaxing music in the class at certain times. And ‘The Media Crew’ are your on-call event photographer and videographer who also produce high quality videos and stock images for other companies in the class. All of these ideas were thought of, applied for, and executed by the children themselves. All because they were afforded the opportunity to be innovative.

If innovation is present in all of us then a sound financial education is what can be used to nurture and foster it. Innovation needs to be recognised, practiced and allowed room to breath. A financial education is both informative, and a way of exploring new concepts. Personal finances need to be contextualised and brought to life to make them relevant. The way in which innovation is cultivated through financial education is by affording students the opportunity to exercise it, and to tolerate risk exposure.

Innovation is often risky business, and thrives in a risk seeking environment. Too much risk reduction and innovation will die out. If we can ensure our children a sound environment in which to innovate, potentially fail, understand the consequences of what occurred, and then have them trying again, then we’re winning. We are building little innovators who don’t shy away from risk. That can stand in the face of risk and see it as opportunity. By opening up their minds to the possibilities before them, beyond butcher, baker, and organic candlestick maker, we will encourage an explorative mindset and extremely rewarding behaviours.

The fact that the average and median age of founders when they started their current companies is 40 says a lot about our risk intolerance. It screams that not enough of our younger generation are willing to take a calculated leap of faith into shaping the future. Only once we are established and perhaps more experienced do we feel we are in a position to add our mark to the world. This needs to change.

Although a fictitious annual income of $75,000 from a successful classroom ‘Roll Call Company’ scheme isn’t reason to retire, it is opening up a possibility for one 11 year old. He has made a business plan, he has marketed, executed, managed staff and cash flow. He has seen the possibilities and knows that perhaps the path less travelled is one he would like to take. It is this aspect of financial education that excites me the most. This has the potential to not only transform one child’s life, but many. It has the potential to change our entire society if we choose.

I feel extremely privileged that I get to bring this kind of an education into classrooms everywhere. Although this aspirational thinking is what excites me most, at the coalface we are seeing exactly how a financial education aligns with the realities children and their families are facing. In my next post I’d like to explore how discussing property ownership with children is vital, and the unique perspective they can offer in that conversation.

Kendall Flutey, Banqer

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Read Kendall’s previous article Breaking poor money habits: bringing financial literacy to the classroom.

The post Financial education: ensuring our kids are free to innovate appeared first on AdviserVoice.

Financial literacy in the classroom for the next generation.

Following the tumultuous financial landscape of late, the importance of a financially literate society has been center stage for a lot of us. The implications of letting yet another generation perpetuate our poor money habits are drastic. However, with this concern comes a real opportunity. An opportunity to break the cycle, and instill some sound personal finance principles. Financial literacy is a vital component of a thriving economy, translating into social and financial inclusion and encouraging well-informed consumer decision making.

We all comprehend the importance of financial literacy, but how do we ensure that we promote, and encourage this as a society, community, and family? Some individuals are fortunate to receive such teachings at home, but for others they go without, and do their best as young adults when they are confronted with financial decisions, big and small.

This is the problem I’m trying to address on a daily basis in my role as a Banqer co-founder.

Banqer is an online financial education tool for schools that aims to give the gift of financial literacy to kids by tying financial education into an everyday, online, classroom rewards system. Not only does it teach students financial concepts such as interest and tax, but it increases daily motivation through the exchange of a classroom currency being paid out by their teacher, and amongst one another.

It is clear that our current ‘triage’ approach, of educating after the fact is not working. Behaviours are set, and habits are already formed. Despite knowing we shouldn’t be behaving in certain ways when it comes to our finances we continue to. Financial services professionals will be able to relate to this first-hand through client stories. A 2014 OECD report finding the “development and integration of financial habits and attitudes begin very early and probably before children reach 7 years old.” If we’re claiming that a seven year old is starting to form the basis of their future financial habits, then why are we not actively shaping these in a formal and standardised manner?

An international movement of nations that are proactively prescribing financial education requirements has begun. Financial education is compulsory for students in ten countries across the globe, and an optional curriculum subject in many others, including certain Australasia. In New Zealand, where Banqer has been operating over the last school year, the findings, both analytical and anecdotal are staggering. Over this series I’d like to encourage a discussion around not only platforms such as Banqer, but more generally the place of financial education in schools.

I’d invite readers to register for a Banqer account, teachers or not. Although we’re a paid service we have a free month trial period, so over this free time I’d like to walk through Banqer together to facilitate this conversation.

I’d like to start by examining the core functionality of Banqer. When it all boils down, we’re simply a classroom currency system set on a foundation of monetary incentives, such a structure that enables teachers to motivate students in a way mimicking the adult world. If I asked “why do you go to work?” majority of respondents would (when answering truthfully) mention some component of financial compensation. This is how the world is set up. It may seem bleak, but we are schooled in order to secure a job, which in turn can finance our living costs. The alignment of interests and work aside, we spend our time working to be compensated financially.

For some they love their daily work, so remuneration isn’t overly important to their motivation levels, but to a large proportion it is. Jolene Butson, has been using Banqer in her year six class for three terms and states; “Having a class currency system creates a real life context in the classroom and gives everything we do an authentic purpose. As a teacher I can create real life experiences to motivate students whilst at the same time building financial literacy understanding and knowledge of careers that will benefit my students in the future.” And it is this “context” and “authentic purpose” that resonates with a lot of students. Suddenly, despite the fact that Banqer dollars are fictitious, they have a newfound motivator in their school lives – their Banqer bank balance. Getting an income for publishing articles on the class ‘publishing wall’, or knowing that the top class speller of the week gets a $300 bonus incentives work, but also familiarises students with the financial realities to come.

With a classroom currency system also comes the practical relevance of completing financial transactions. By giving students access to such an experience, enabling interaction with their finances through a mock online bank account, Banqer opens the mind to understanding of how we can relate to our intangible finances in the age of digital currency. The implicit learnings taking place when requiring students to complete simple transactional tasks, like setting up automatic payments to their teacher for renting their desk, are massive. Colin Hill, a New Zealand based year six teacher has seen these learnings transitioning into real life action; “They are accessing it at home and discussing with friends and family. Some children have actually looked into opening their own [real] bank accounts especially realising they are getting interest on their savings. It’s awesome hearing children having these conversations with their parents!”

Classroom learnings transitioning into sound financial decision making at a young age like this is blowing us away. And incidents don’t stop with one example. I hear regularly of children requesting to set up bank accounts after having used Banqer in their class. This conversation excites children. It’s not too much, too soon – it is the right time to be starting these conversations, and we’re finding that school is increasingly the right place to start having them.

Next time we’ll be exploring how to ensure a financial education can encourage and develop the next generation of innovators, as we discuss the current risk appetite of students versus adults. If you haven’t already, be sure to register for your free month on Banqer, and join in the #FinEd conversation.

Kendall Flutey, Banqer

The post Breaking poor money habits: bringing financial literacy to the classroom appeared first on AdviserVoice.