Learning by Doing: Promoting Financial Knowledge in Chile
Recent research from Chile’s National Institute for Youth, shows that many Chilean youth from ages 15 to 29 struggle with excessive debt. Four percent of Peruvians between the ages of 15 and 19 years old carry debt; and this amount increases as they get older, of those between the ages of 20 and 24, 36% carry debt; and 55% of Peruvians aged 25 to 29 years old carry debt.
Ana Paula Aleixo, Scotiabank Chile’s CSR Manager, believes that excessive financial burdens limit the future of young people and jeopardize Chile’s long-term financial well-being. “Financially healthy individuals contribute to a better society. Lines of credit, loans, and mortgages can be used to purchase items that can take a long time to save for and can allow a young person to build a credit rating by making their repayments on time — but only if they are used responsibly.” she says.
“Young people in Chile desperately need to be educated on how to use financial resources wisely — for the betterment of everyone.”
A hands-on approach to financial education
123 Emprender (123 Let’s Start!) is a Scotiabank-sponsored initiative in Chile that seeks to promote financial knowledge amongst young people. A partnership between the Bank, Juega Más, and the Center of Excellence in Economic and Consumer Psychology at the Universidad de la Frontera, 123 Emprender trains Chilean teachers to expand students’ financial knowledge while broadening their financial horizons. Unlike traditional financial literacy classes, the program is built on the belief that students learn best through hands-on projects, where they can feel a sense of responsibility for long-term project outcomes.
Improving student health
Prior to 123 Emprender, the health unit at Centro Educacional Mariano Egaña public school in Peñalolén — a commune in Chile’s Santiago Province — was understaffed and in need of supplies and materials. Through the guidance of 123 Emprender-trained teachers, students dramatically improved these conditions. After determining what supplies were needed in the health unit, students presented a business plan to Scotiabank that gave them access to a small amount of capital. Adhering to the strategy outlined in their business plan, students used this money to create material for fundraising activities — such as posters, leaflets, and other promotional items.
The success of these campaigns raised awareness for the health unit among students, parents, and the local community. As a direct result of their efforts, the school has committed to direct 10% of the money raised through all fundraising campaigns directly to the health unit. This has created a reserve fund that is teaching students how to procure items, manage a budget, and save.
“We do not just want to give students money and teach them how to make a budget,” says Ana. “We want to encourage them to think bigger and ask, “What can I do with this money? How can I make it grow in order to benefit other people’s lives?" We believe that this is the key to real financial education.”
What started as a teacher's development program to promote financial education has turned into a project with broad social implications for the entire Peñalolén community. The 700 students that attend Centro Educacional Mariano Egaña will benefit as the school’s health unit improves over time. Parents and the community rallied together to prioritize student health. Students gained hands-on experience starting and managing a business, and are now working to ensure that the project will be sustainable for generations of future students.
The value of financial literacy
As Ana explains, when you give a student financial understanding, you empower them in other ways as well. “Finance is an essential part of everyday life. Teaching children to manage financial resources teaches other important life lessons — knowing its limits, tolerating frustration, planning goals… All of these lessons can be applied to other areas of life.
“Companies increasingly have to take charge of their impacts on society. And the biggest impact we have as a bank is on the relationships between people and their finances. We are responsible to ensure that the programs and services we offer are good for our communities — so we can contribute to development and growth.”