What defines financial literacy? | Big Think

What defines financial literacy?

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Around the world, girls are in positions of extreme vulnerability and risk. How can we increase the survival and empowerment of girls and women who have no education, who are married off as children, forced into prostitution, and who live in regions where AIDS/HIV is common?One proven strategy is financial literacy programs, from as early as age six. It is the bedrock of change. When girls understand finance, savings, and how to think assess opportunity and risk, it is proven to impact seemingly unrelated areas of life, such as understanding their risk of contracting HIV/AIDS, explains Judith Bruce.Invest in the poorest girls in the poorest countries early, says Bruce. Financial literacy affects their future decisions on health, education, and gives them their own economic agency. This benefits flow on to their children and will build a better, safer world.

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JUDITH BRUCE:

Judith Bruce joined the Population Council in 1977. She is a senior associate and policy analyst with the Council's Poverty, Gender, and Youth program. Through policy analysis, evidence-based intervention design, advocacy, and capacity building, Bruce leads the Council's efforts to develop programs that protect the health and well-being and expand the opportunities of the poorest adolescent girls in the poorest communities.

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TRANSCRIPT:

JUDITH BRUCE: Financial literacy is kind of bedrock to any long-term change pretty much for everybody, but certainly for females. The world spends a lot of time talking about the SDGs—these are the Sustainable Development Goals, they mention all sorts of goals—health, equality, participation—that cannot be realized unless you have some authority over resources. You can know a right, but if you don't have a way of getting that right or a bargaining position then it's just an idea. For girls, they begin to see themselves as just an extended part of other people, they begin to define themselves as doing household and "domestic activities". They don't see themselves for what they are, which is vital economic actors. So the first thing financial literacy does is it says you're an economic actor, you're making economic choices every single day with the way you use your time, the way you use scarce resources; much of the work that you do makes it possible for someone else to do some other work. So just an identification.

Financial literacy also means building specific capabilities, being able to analyze situations, risk situations, and opportunity situations. For example, when you're working with a population which has never thought of themselves as being economic contributors, if you ask the question, "Well, imagine that you're a girl of 12 in domestic service, what are the times that you are in the riskiest position?" And then people will say, "Well, oh, when you asked for your salary, because if they don't give it to you you have no recourse you're on the street." If you ask, for a young married girl, "How is it she's going to choose a number and timing for children?" Well, she's not. She's not unless she has some bargaining position with her partner. If the partner has complete control over her, sexually, and her fertility, she has no way of saying, "I don't want to have a child now," or, "I want to wait," so her being able to control some resources and not feel completely dependent.

What happens often is that young women, females, are working and they're earning but they are not able – they're trying to save but they're turning over almost all of what they make and their time to other people. So financial literacy makes them aware of the fact that they are, daily, supporting not only themselves but others.

It also teaches real world financial inclusion skills. What are different kinds of savings? What different kinds of savings do you need to have? You need to have emergency savings, because particularly for the poorest, if you don't have some money aside for an emergency then a young female in particular is at immediate high sexual risk, or she may need emergency savings to help another family member. Then there are longer-term savings, which are goal oriented, for example, saving up towards education. We have in our work something called the cash flow tool, and I remember in Haiti after the earthquake we became aware that there was a catastrophic level of sexual violence against the girls, and most of these households wer...

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