I was recently invited to participate in a campaign to spread financial literacy in Turkey. The program is designed to offer women in Turkey an introduction to financial literacy throughout all 81 provinces during Women's History Month, March. Those who elect to take the class learn about the basics of stock markets, bond markets, calculating inflation, and the different types of financing among other things. I volunteered to teach classes in eight districts throughout the country comprised of four cities in the east of Turkey and four heavily populated districts within Istanbul. With only a few classes left to teach I wanted to offer insights into what I've learned from the participants so far.
First off, financial literacy is abysmally low wherever I go around the world both among laypeople and among "professionals." Must everyone know how to calculate the acceleration of stock prices and how it impacts options pricing? Of course not. Should everyone know why prices change for everyday goods and what the role of policy makers is in insuring price stability? Definitely.
If I learned anything by touring Ireland and Northern Ireland last month in talking with people about Brexit, it was that most people have no idea what Brexit will mean for both their countries and for them personally. To be clear, not only do voters not know enough about what Brexit really is but elected officials and financial professionals also appear to be very much in the dark. This is a pattern that exists nearly everywhere when it comes to finance and it is a shame. If knowledge is power, financial illiteracy is the ultimate relinquishment of power. Willful ignorance is the quickest way to financial instability.
There are popular and hilarious memes on social media that poke fun at how we were taught topics in school growing up that have no real-world value to us as adults. Writing a check, opening a bank account, brokerage accounts, retirement accounts, and filing taxes are all things that we weren't taught as kids growing up and similarly neither were kids growing up in Turkey. In speaking with the participants of these financial literacy seminars I can see that many are highly motivated to learn as much as they can about these topics but were simply never exposed to them in the past. The education system has failed many adults and it's time to insure it doesn't fail the next generation with respect to financial literacy.
The most basic topics include how to plan for retirement and how to take advantage of compound interest. Equity financing versus debt financing is an especially favorite topic of mine and understanding equity financing may help in promoting entrepreneurship in the future. I love the reaction of the classes when I talk about how currency markets are efficient and predictions involving the said markets are nearly impossible. Similarly, they are often surprised to learn that gold may not, over any given period of time, necessarily appreciate although it has for nearly the entire lifespan of many of the participants in dollar terms and especially in Turkish lira.
The one thing I've learned during these classes is that people who have been denied financial literacy in the past are especially eager to learn as much as they can so that they can now begin to take control over their own financial fate and this makes me especially happy.