Istanbul, Turkey – Rioting that started as a reaction to plans to bulldoze a park and escalated into a violent nationwide protest was big news over the weekend. I was among those that wound up dodging tear gas canisters in Taksim Square. It’s a big deal when the people in a developing nation demand a voice—and an end to excessive police force. The burning in my eyes and throat reminded me that some things are worth the fight.
As it happens, I was in Istanbul for a different fight, one having to do with spreading financial know-how. Turkey has recently joined the global movement to do just that, and at a biennial Visa Europe conference on financial capability, Turkish officials revealed that a formal plan is imminent. Amid the unrest, few noticed that Turkey is set to become just the 24th nation in the world with a formal strategy for teaching its people how to manage money.
This is a big deal, too. The world is in a different state than it was a decade ago. The financial crisis laid bare a pressing need for individuals to be able to make better money decisions—not just for their own long-term financial security but also for the good of the global economy.
The U.S. has a formal national strategy for financial literacy, as does the U.K., Brazil, New Zealand, and Australia, among others. A couple dozen more, from Canada to Thailand, are developing a strategy. The more the better—for all of us. But getting these plans implemented will take a fight. Critics of financial education say it doesn’t work and is a waste of resources; they are springing from the woodwork.
The financial education movement has roots that precede the financial crisis. In Turkey, for example, authorities decided in 2004 that they wanted to turn Istanbul into a global financial center and that in order to do so its citizens would have to know a lot more about how money works. In the U.S., the movement dates to the mid-1990s, when retirement savings became a hot topic. Columbia got its programs rolling to inform citizens about inflation. In Spain, it was about the Internet bubble.
But the financial crisis gave the movement wings as governments and individuals everywhere decided that people need to be able to fend for themselves. With risky and complex financial products proliferating, “financial education is the first line of defense,” Flore-Anne Messy, director of financial education at the OECD, told the Visa Europe conference. Today, she said, financial education is “more visible at the global level.” In most countries it is about giving young people, in particular, a solid understanding of personal finance so that they respect credit and start saving for old age early and often.
While I was visiting Greece last year, banking authorities told me they were on board the financial education movement as well—but that first they needed to fix their debt-wracked economy. Turkey also has higher priorities. The influential economics commentator Erdal Saglam at the newspaper Hurriyet told the gathering that financial literacy is a fine goal but meaningless if borderline authoritarian rule cannot be defeated.
He’s probably right. Still, in a nation that sees bank CDs and gold as their best investment options; where the savings rate is falling and consumer interest expense is on the rise; where half the people borrow money to repay debts; and where a new benchmark survey shows only a quarter of people understand compound returns, it’s encouraging to see them multi-task.