Financial literacy makes people better able to plan ahead - Business

Business

Financial literacy makes people better able to plan ahead

By Nekiesha Reid Business reporter
Sunday, July 29, 2012

People who do not know enough about money matters are easier to defraud, says the Organisation for Economic Co-operation and Development (OECD).

Not knowing the difference between savings and investments, for example, can hinder people from setting up a college fund or sufficiently planning for retirement.

In a bid to find out how much people know about monetary issues, Jamaica's financial services regulator has teamed up with the OECD to conduct its National Financial Literacy Baseline Survey.

The Financial Services Commission (FSC) is conducting the survey in all 14 parishes and hopes to provide programmes to address any gaps that may emerge.

The official survey will be completed next month but to get an idea of the responses the FSC might be getting, the Jamaica Observer took to the streets last week, asking seven people, "What's the difference between stocks and bonds?"

"Stocks mean that you do business," one man said. "And a 'band' is when you join a 'band' with a company or an organisation and you are a part of that organisation".

Another respondent said, "I seriously have no clue as to what stocks and bonds are. That's probably bad. I should probably go and find out".

"I just know that it's something you trade on the stock market," one woman said, after confessing, "I don't know much about it".

One young man who said he had never even heard the terms before wanted to know, "How do I go about getting some information?"

Complete financial literacy is the aim of the FSC's survey, communications manager Nadene Newsome said.

A stakeholder approach where various institutions come on board to provide customers with information will help cover the budget for any future financial education initiative, she said.

Many countries have had problems getting national budgets approved for this sort of initiative, Newsome said, but she hopes that the collaborative approach would solve the problem of financing in Jamaica.

Financial literacy allows individuals to challenge financial service providers, and has a positive effect on investment levels and the economy, says the OECD.