Category Archives for "News"
I was fortunate enough be invited as guest speaker on Kate Holmes’ Innovating Advice podcast. I got to talk about my advocacy for financial confidence and the risks women face in wealth and finance.
My advocacy on gender and pay equality came to be when I realised that women face a lot of long term financial risks due to their specific life circumstance. On one of my previous blog posts, I discussed the inherent risks of being a woman.
A simulation of women’s wealth accumulation over a lifetime showed shocking numbers. A pay gap of only 10% ( all else equal) could lead to a wealth gap of approximately 40% between a man and a woman!
To give you an idea of pay gaps in the EU, here are the numbers:
The country with the lowest pay gap as of 2019 is Romania at 3.5%.
The country with the highest pay gap as of 2019 is Estonia at 25.6%.
The EU average as of 2019 is at 16.0%.
If you'd like to read more about this. You can access the fact sheet from the European Commission here.
Further research shows that 8 out of 10 women believe their financial capabilities and knowledge are lower than their partners'. 6 in 10 women shy away from long term financial responsibility due to lack of financial confidence. In short, Women underestimate themselves and their capabilities.
My reaction to his research is simple: unless your partner would have a degree in finance, there is little reason to believe that they are inherently more savvy in long term financial matters. This is a perception gap that we really have to close.
Women are perfectly capable of managing short term financial matters, monthly budgets and household expenses. Trust me when I say this part of finance is far more time and energy consuming than long term financial planning. So if you’re already doing the hard part, why would you not be good enough to do the easy part, too?
To this I would also add a (potentially controversial) comment: if long term financial planning had been a boring chore, I am sure that historically, men would have found reasons to delegate it to the women in the first place. So rest assured that it is the more fun and engaging part of managing money!
If we want to reduce gender inequality, we have to empower fellow women to step up. We have to encourage them to learn and take responsibility when it comes to long term finances. We have to encourage and educate women about how we should perceive our worth, value our time, and plan for our financial futures. Women need to develop confidence so that they can fully take control of their finances.
The first step I recommend:
IGNORE THE INTIMIDATING FINANCIAL JARGON and the fact that you feel it is too complex to understand. Finance is complex, but the good news is: you don’t need to be an expert to put a robust, long term financial plan in place.
To make an analogy with the medical world: you don’t expect to be knowlegeable yourself in anatomy and medicine before seeking out a cardiologist if you have a heart problem. So why would you expect to have to be knowledgeable in finance before seeing out a trustworthy financial advisory?
All YOU need to focus on is: clarifying your short term, mid term and long term goals. Translating that into a robust financial plan is not so hard once you have found the right advisor. The latter is probably the bigger challenge, especially for many women. How can I find an advisor I can trust, who is not just pushing products at me or charging me for “financial wellness” coaching that I don’t really need to pay for at all? If you’d like to discuss that topic in depth, direct mail me and I’ll be happy to address it in a future newsletter.
Too many banks, financial advisors and event online platforms still tend to treat women simply as a segment to market to. We women are about 50% of the population and we cannot accept to be an afterthought in their sales processes, designed to meet the needs and expectations of men. We have the right to expect a value proposition that is tailored to our needs: to the language we feel comfortable with, to the level of information we seek, to the life circumstances we face, and to the time management challenges we face juggling families and carreers.
From the start, businesses and sales processes need to be developed with women in mind. Whenever they create something -- product, service, platform, etc. - financial services providers need to become more inclusive and ask "Will this appeal to women as much as it will appeal to men?"
On our side, we women need to learn to be more confident in speaking out our needs and wants. We need to put our foot down and know our worth - and if we don’t feel comfortable talking about finances with an advisor who throws jargon at us, WE ARE NOT THE PROBLEM: it is the advisor who needs to adapt to our needs, and not vice versa. Women are the clients. Women don’t need fixing. The system needs fixing, to fully embrace women’s needs and meet their expectations.
As the saying goes: prevention is better than cure.
With that in mind, I encourage that you start teaching your kids about pay equality and financial confidence. It does not matter if they're a boy or a girl! What's important is that you open up these topics and teach them while they are young.
If they grow up aware and practising equality, then they can also become a positive force of change amongst their friendship circles and later on as professionals. After all, it only takes one to start a movement. If you also couple it with a lot of positive reinforcement and examples, then they're sure to grow up fighting for equality!
Once again, fellow parents, this is why I wrote A Smart Way To Start. I realised that only fighting for gender equality in the professional world is not going to be enough. We need to eliminate biases our children unintentionally grow up with. So I tried to break down all those concepts in a way that's easy to understand and to remember -- through rhymes and illustrations.
I do hope you found this helpful as you journey on through parenthood. If you'd like to learn more and read more tips, please subscribe to my Monthly Money Tips newsletter!
Last April 21, I had the pleasure of delivering an online webinar hosted by SmartPurse. I was invited to talk about "How To Teach Your Kids About Money" in their Weekly Money Hour session. In this webinar, I got to talk to fellow parents about about the importance of teaching your kids about money.
I discussed why it's important to introduce kids to the concept of money and savings as early as possible.
I've worked in finance long enough to see that we need better ways to talk about money, especially to little girls. To tackle the gender pay gaps we still experience in the professional world, we need to equip young girls with the skills to talk about money with confidence. I realised that if we only talk about earning, equality and knowing your worth to adult women and men, we are tackling the problem 20 years too late!
Here are three important research-based facts:
Confidence is shaped by the age of 5.
Adult money habits are set by the age of 7.
Girls can experience pay gaps of 10-30% by the age of 10.
This is why I push for early financial education with kids, girls and boys alike.
The earlier we discuss money and confidence, the earlier we can help children to understand the notions of time-value and equality, and to adopt good money behaviours. Learning relies a lot on concrete actions and routines, so it's essential to start them early. You can incorporate money conversations and negotiation training in their everyday. Negotiating the value of a chore is an important part of learning to know one's worth and speaking up confidently to claim that worth. You can integrate these lessons on everyday things like allowances and chores.
With your guidance, your kids will be able to grow up responsibly, conscious about value, fairness and equality.
After all, it's easier to raise kids with the right habits. Undoing any bad habits they grew up with is so much harder.
According to the World Economic Forum, it will take about 257 years before we can reach economic gender parity. We cannot wait another 7 generations to close the gap.
This is why I created A Smart Way To Start. I want to encourage parents to teach their kids about money, equality and sustainability. If we start these conversations with kids early on, they will grow up and come into the workforce already well-informed.
Imagine if we multiply these efforts to thousands or hundreds of thousands of families. We will come to a new generation of workforce that is financially-savvy and equality-minded.
Imagine how pay and workplace equality will be revolutionised when a generation of well-informed children come of age. Imagine how policies and regulations will change when a generation of values-driven youth enter the workforce.
When we teach kids about financial responsibility, we are teaching them how their money impacts our world. How it impacts others (fairness and equality) and how impacts our planet (responsible consumption/production and sustainable choices.
Indeed, money is not only a transmission of value, it's a transmission of values. With issues like global warming, unjust work policies, unsustainable business practices, every money decision counts! Teaching your kids about ethical and eco-friendly options lets them know that they have a choice when spending their pennies. Each product they choose to spend their money on will show that kind of practice and policies they support! When we choose consciously, we can have a huge positive impact!
That's how powerful money is.
At the end of the day, despite whatever money and sustainability lessons we try to impart to our kids, they won't believe us if we don't practice what we preach. We have to set good examples to our kids.
Let's be more conscious with our with our purchase choices, especially when we're around our kids. And even with our savings and investments, we can chose to steer our money towards more positive impact. This might still be quite an abstract notion for little kids, but as they grow older they will grasp this notion too. In whichever form we give money to companies, whether buying their products or buying their shares, we are supporting the way they do business.
If we want to raise our kids to be conscious and discerning adults, it has to start from us.
If you'd like to watch the whole webinar, check the video below:
In January, I had the pleasure and privilege of becoming a resource speaker at the World Economic Forum in Davos. I participated in the event as an opening keynote speaker for "Primary Futures" in Davos Platz Primary School. The event gave the children a chance to meet international role models and World Economic Forum delegates. They got to learn more about careers and sustainable development.
In my keynote, I tried to explain to children the importance of sustainable development and financial literacy. I shared with the children the rate at which the world is changing and growing.
By 2050, there will almost be 10 billion people! That growth is roughly equal to 200,000 people every day. To give the numbers more meaning I explained that this growth means:
This staggering amount of population growth in a planet with finite resources causes alarm. I explained to the kids that by the time they finish school there will be:
It's important to break down the repercussions of the continuous rise in population. Kids don't understand macro-level world issues yet. So the number of people may seem very abstract because it's also hard to imagine that scale. But if you explain to them what the effects are and how the population rise will affect their entire future, then it becomes serious. You have to explain to them that there will be more people eating the same amount of pie.
If you cannot find a way to reduce the amount of people who will be eating the pie, then you have to find a way to make the pie be enough for the growing number of people wanting to eat it.
We have to make our kids aware because it is their future. As parents, we want them to grow equipped and prepared for the challenges ahead. They are inheriting a world that's over-consuming. As they grow up, they will realise that it is a world full of problems and challenges. They are inheriting an aging society. With medical advancement, life expectancy is rising -- people are living longer due to medical advancements.
But, this also means that the next generation is stepping into a world full of opportunities. The continuous rise of the population coupled with the problems of climate change and irresponsible capitalism is a hotbed for innovation. What's important is that we instill the principles of responsible resource management and smart choices from an early age: Sustainability and Financial Literacy.
Learning about Sustainability will help our kids learn how to manage finite (natural) resources. Financial literacy will help our kids smartly manage and allocate financial resources over their lifetime. In a world that is growing despite the finite resources, what's important is that kids learn smart resource management. We need kids to learn how to properly allocate their limited resources to maintain or create the best quality of life for them.
It's about mastering longevity and making sure that the resources they have will be enough for their lifetime.
We need to empower our kids to start being smart about the way they look at resources early on. It's our responsibility to help them cultivate healthy habits that will allow them to lead a financially smart and consciously sustainable life.
This International Day of The Woman, I am celebrating the strength, willpower, and resilience of women all around the world and all the women who came before us: all the advancements we have seen in gender equality in the workplace as well as all the progress we have seen in labour market participation, political participation, in STEM education, in health and in women’s rights across the globe. At the same time, I invite all women to continue to make bold moves and choices that will further empower themselves, their families, their children and their communities - and take more control and ownership over their financial futures.
We are strong, we are worthy and we are capable. We are more than capable of shaping the brighter, diverse, creative and rewarding future that we strive for.
And together with all the men who are encouraging us, supporting us and teaming up with us along our way. Keep going strong! For ourselves, for all our families, for our daughters and for their daughters and for all the generations to come.
And we all know that sometimes it’s hard, and some days we feel like giving up, some days we feel it’s unfair, and some days we don’t want to always have to fight. But most days...well, most days it’s GREAT. It’s fun, it’s empowering, it’s encouraging and it’s joyful. Know that we are in this together and that we are making huge strides forwards. Because we dare.
We are the change-makers, we are the dreamers, we are the doers. We make equality advance. Every time a woman takes a bold step forward, we all rise.
In order to empower more women to reach their potential, we have to start young. We have to start with the girls. A Smart Way To Start helps girls prepare to enter the workforce on equal terms by helping them to know their worth, empowering them to talk about their pay, and guiding them to becoming savvy in managing their spending and savings.
As they become more and more independent and confident with their money decisions, they’ll also learn that every money decision in life is an expression of values: an opportunity to impact our world positively.
So let’s raise our glass to an equal future and to the rise of girls in every nation. They are our hope. They are our future: the next wave of women who will rock this world, and may the whole world dance to their music!
I had another interview with Vivamost where I talked about another issue close to my heart: the challenges faced by women at work. I know that there are already efforts to reduce gender inequality women’s disadvantages in the workplace. But I believe that we still have a long way to go.
Inequality and imbalance in the workplace often begin with imbalances between unpaid workloads at home. These unpaid workloads create ripple effects on women’s careers. Career and financial advancement in the workplace have traditionally put women in the backseat and much work is still needed to overcome these biases.
Here are several aspects where I feel women are at a disadvantage:
According to a Q&A conducted by Mary Brinton, a professor at Harvard University, the problem of gender equality in the workplace comes from when young adults try to balance work and family.
Women end up shouldering the lion’s share of care giving responsibilities in the household. This disadvantages them in the workplace. How so? Women are pressured into giving more hours for household activities. At the same time, they are expected to maintain the same working hours and work quality as men are. However, leaving the office early can still be stigmatizing — women are then perceived as either lazy or someone who doesn’t take work as seriously as men.
Up until a few years ago, childbirth came with a compensation penalty for women and a premium for men. Because men didn’t have to go on months-long maternity leave, they were more valued in the organization. But their paternity and the responsibility of a family was often reason enough for a pay rise.
In fact, one of the biggest issues I find that women run into in their careers is finding advancement opportunities after maternity leave. While maternity leaves are not penalized in compensation anymore, it does still cause a delay in promotions for women. It is very seldom to see a woman who gets promoted during or immediately after maternity leave. Usually, the promotion falls through the cracks and it takes more months or years upon return to re-qualify for the promotion.
Another one of the biggest conflicts that women face in the workplace is feeling disenfranchised after maternity leave. Since they have been gone for a while, they feel like they have been replaced or that they only get the leftover tasks.
Studies show that men are promoted based on potential while women are promoted based on performance. This means that women will need to work twice as hard to get the position that men will only need to show promise for – and this is particularly penalizing for women working part-time.
Even for the women working full time, career progression is often slower than for men. The number of women in C-level and board-level positions is astoundingly small.
Women are generally not trained to negotiate and demand higher compensation. My friend, Wies Bratby, the founder of “Women in Negotiation” said that “if the salary you are asking for is a figure that makes you sick to your stomach, then you’re probably close to what you should get.” This made me realise that men are generally bolder and more inclined towards negotiating their pay than women are. Men ask more and they get more because they do. I think it’s time women also learn to ask more and be more confident in how they ask for money.
Women tend to take on more responsibilities in the desire to prove themselves but this only ends up in them taking up more tasks without receiving more pay for it.
Women need more than just mentorship. They need sponsorship in organizations and more workplace support.
They don’t need more good advice, they need to be given concrete opportunities. They need senior people who will vouch for them and put their names forward for new jobs. They need seniors who will fight for their well-deserved promotions even if they are going on maternity leave. They need seniors who will re-empower them upon return by assigning and giving them responsibilities aligned with their abilities.
Brains are seldom affected by birth-giving. Flexible work time is only a question of availability and not of ability. We can actually work around this issue by treating maternity and maternity leaves as logistics issues versus compensation and qualification issues. With telecommuting becoming more and more ubiquitous in the workplace, then this is definitely something we can look at.
Another solution that’s a bit more long-term is the proposal that we should start early. By this I mean that we should start talking about things like pay equality and financial literacy to children. I created A Smart Way To Start for this purpose — I broke down difficult financial and banking concepts to make it easier for younger kids to dissect.
By no means is this article a comprehensive list of things that still need working on when it comes to gender equality and the workplace, but I hope it encourages conversations and brings awareness to what still needs to be done.
We have a long way to go until we reach a point where we can truly say there is gender equality. But we have to realise that concrete baby steps are still better than no progress.
I was interviewed by Anusha Swetha of Vivamost about my advocacy for financial literacy and sustainable development. I got to discuss how I believe that your everyday transactions reflect your values. Sustainable living isn’t just about reducing waste and speaking out; it’s also about the kind of companies you support.
Ordinary people like us might think that, alone, we can’t really have a big impact. We might think that we don't have the power to create laws or the influence to sway policies that would make our world a better place. It also comes to a point where we feel insignificant, that our individual consumer choices just a drop of water in a very capitalist ocean.
I beg to differ. Every single product or service we choose to buy sends a message about the kind of commercial and corporate practices we support. Sustainable living is about making a conscious effort to know who makes our products and where they come from.
People around the world are more aware than ever of environmental concerns. To send stronger messages to companies that we care about the environment, we have to support companies that do, too.
Conscious living and sustainable consumerism aren’t just about buying "bio" and "eco-friendly" products. It's also about making sure that the companies who make your products are dealing with ethical and sustainable business practices.
You see, the sustainable lifestyle we choose is reflected in the products and services we support. It’s hard to make every choice 100% sustainable, but every little bit counts. Whenever you can, choose products and services that have more positive impact on our planet. What's important is that we live each day more consciously and conscientiously.
We have to realise that sustainability and sustainable development are multi-generational efforts. For our children to begin living a more sustainable lifestyle, we have to set good examples and engage them in a dialogue about conscious choices.
What smart choices will you choose to make today?
To celebrate WORLD EARTH DAY (22 April 2020) we are paying tribute to Greta Thunberg, who’s voice, heart and courage are exemplary to us all.
These rhymes are dedicated to her, and to all the children and adults who are committed to saving our planet and making the world a better place.
You've heard Greta's message on climate, I'm sure:
our planet has problems we cannot ignore.
Can you save the planet if you’re just a kid?
I’d say: “Yes, indeed! It’s high time we all did!”
At school we learn all about our ABCs
so why don’t we also learn our SDGs?
The same way we need every letter to spell,
we need SDGs for the world to do well.
Twenty-six letters to write every line:
they’re easy to learn when you read them in rhyme.
So just like the alphabet, let’s learn by heart
our 17 SDGs – come on, let’s start!
All the world’s Nations United as one,
aiming to finally get the job done:
defining SUSTAINABLE DEVELOPMENT GOALS,
rethinking our actions and everyone’s roles.
So here is rhyme that is easy and fun,
so everyone knows what we need to get done.
You can do your part, now that you know
our planet needs all of us. Ready? Let’s go!
No one ever should be poor
nor be hungry ever more,
nor be ill without good care:
so life is better everywhere!
Children need to go to school.
Equal treatment is the rule.
Everywhere you go you’d see
clean water and clean energy.
With decent jobs life’s more fun,
so growth is good for everyone.
Infrastructure is the key
to lower inequality.
We must build sustainably
our cities and communities.
Choosing wisely when we buy,
means our planet will not die.
Save the oceans and the seas,
the animals and all the trees.
For the world to live in peace,
let’s all be good partners, please.
SDG 1: no poverty
SDG 2: zero hunger
SDG 3: good health and well-being
SDG 4: quality education
SDG 5: gender equality
SDG 6: clean water and sanitation
SDG 7: affordable and clean energy
SDG 8: decent work and economic growth
SDG 9: industry, innovation, infrastructure
SDG 10: reduced inequality
SDG 11: sustainable cities and communities
SDG 12: responsible consumption and production
SDG 13: climate action
SDG 14: life below water
SDG 15: life on land
SDG 16: peace and justice and strong institutions
SDG 17: partnerships to achieve the Goals
Copyright 2019, Mara Catherine Harvey
The United Nations' Sustainable Development Goals (SDGs)
May every child grow up knowing about the Sustainable Development Goals (SDGs) and learning that they, too, can START DOING GOOD at a very young age.
Book 4, A SMART CHOICE TO MAKE will be all about SDG 12, and how our choices can make a difference to this world, every day.
I had a brief, but a very eye-opening interview with IMEX America about the Women and Risk, where I talked about the real risk that women are facing: the compounding effects of the gender pay gap.
It was one simple question that started this all actually:
To be honest, I didn’t realise that asking this question would open up a Pandora’s box that would lead me to as far as creating a children’s storybook that will help facilitate money and gender pay gap discussions.
When I first encountered the question on the pay gap, I asked our Chief Investment Office to simulate the wealth growth of a man and a woman after university, in setting out their professional journey, buying a house, etc. The result was so stunning that our team couldn’t believe the output when they ran it for the first time.
After a couple of days, they finally brought the model to me and told me, “Look, we tried and we calibrated and we checked everything. The model is right, but the figure is shocking.”
It turns out that just a 10% pay gap (a very benign assumption) and all else equal between man and woman; resulted in a 40% wealth gap over a lifetime. Just to put this into perspective: a Eurostat report last 2017 reported that the highest recorded gender pay gap in the EU is in Estonia at 25.6%, and the lowest is in Romania at 3.5%.
On average (in the EU,) a woman’s gross hourly earnings 16% less than a man.
In my home country, Switzerland, the gender pay gap is at 17%. At about 20% pay gap, with all else equal, the wealth discrepancy balloons to 85%.
It’s a shocking, but oftentimes, heartbreaking reality for most of us.
That is why we constantly need to bring financial awareness into the conversation. I keep encountering women who say “I’m not really as involved in financial matters as I’d like to be.” Very often, women think that their partners or spouses are more competent than they are.
You see, we did a survey on several thousands of women internationally and it turns out that 82% of women believe that their partners are more knowledgeable about money. Unless your partner studied finance explicitly, then there should be no reason that your partner will be more financially knowledgeable about money than you are.
We have to work harder not just developing women's financial knowledge but also improving women’s financial confidence. We have to develop and grow financial awareness and trust more than financial expertise.
How do we make women aware of the fact that abdicating financial decisions is not a good idea, especially when those (wealth discrepancy, pay gap, etc.) are the consequences that you could face?
Research shows that confidence is shaped by the age of 5 and adult money habits by the age of 7. So if we’re not having this conversation with little kids, especially with little girls, then we will be guilty of helping perpetuate the shocking pay and wealth discrepancies between man and woman.
We have to start talking to our little girls (and boys) early on so that they know their worth and that they are encouraged to negotiate their worth. If they are doing a chore, can they ask extra money for it? Negotiation and knowing your worth are two skills that are important, especially when you’re entering your professional careers.
We can’t let our children grow up unaware and thinking that the world is equal and fair because it is not. We have to equip them with the awareness and the truth so that they can continue to make choices that are towards a sustainable and equal future.
Christmas is approaching fast and it is the most wonderful time of the year! Maybe your children will be lucky enough to receive a gift of money from relatives and friends. So this is a perfect opportunity to put into practice the learnings from books 2 - A SMART WAY TO SAVE - and from book 3 - A SMART WAY TO SPEND.
When the excitement of Christmas Day is over, have children appreciate the gift they have received by explaining to them the value of this gift:
How many a hours of chores (which chores and at what price per hour? ) would they have had to do, to earn the amount gifted to them? This is a great way to practice mental math (super important skill for future financial confidence!) and engage in a values-based discussion. Appreciating that other people had to work hard for the money gifted is an important part of the learning journey.
How much of this amount will be saved and how much will be spent to fulfill a Christmas wish? Remind your child not to take all their money with them when they go shopping, so they don’t fall into the trap of spending it all in one go! Setting some aside is a wise way to start planning.
What will you chose to spend your money on? Have you made a list ... and checked it twice? Even Santa checks his list twice! The smarter the planning, the less likely any pennies will be wasted on something of poor quality or that will be played with once and then neglected.
What about donating some for a good cause? This is a great opportunity to think of people less fortunate and teach children that sharing is caring. And choose wisely which organizations you donate to. A great starting point can be to introduce your child to the United Nation’s 17 Sustainable Development Goals (SDGs): pick a cause that is close to your heart!
Does “Sustainable Development Goal” sound too complex for your young child?
No worries - we made it kiddy friendly with our “Start Doing Good” poem! It teaches children the SDGs in a simple way - and it’s as easy to memorize as the alphabet!
Enjoy doing good this Christmas!
I've been fortunate enough to have been interviewed by Ana Maria Montero of CNN Money Switzerland, where I got to share more about my advocacy for financial literacy for young girls (and boys.)
In this interview, I got to share about the statistics and motivations that got me to creating the "A Smart Way" series.
If you're interested to watch the interview, you can access it here. Otherwise, here is the transcript for you to read. I've underlined some important points that I think captures the essence of this interview.
AMM: Do you remember the first time that someone sat down with you and talked to you about how to manage money? In my case that happened quite late in life. But I’m joined today by a guest who advocates for this skill being learned much sooner rather than later. Dr Mara Harvey thank you so much for joining us today.
MCH: Thank you for having me.
AMM: Now, do you remember the first time someone sat you down and talked to you about money?
MCH: No. Actually, I don’t really because I just remember being told how important it is to save in life but never having a real conversation about the magnitude of that, the importance of it, and how to picture it, especially in the long term.
AMM: And why is that important?
And I think it’s a structural problem we’re not really addressing. In addition to the problems that we already see today with regards to women and involvement in financial decision-taking.
AMM: So it’s really, from what I understand, especially from the books that you’ve written...you’ve written a series of books on instilling financial confidence in children…[that] this really happens at an early age. Is it like languages where there’s kind of like a window of financial understanding that is more difficult to overcome later in life?
And I think that’s why we need to start changing the conversations if we want people to grow up with a different notion of money and ethics.
AMM: I mean I have a child in second grade and they have just started to count money in school. So but I feel like, instilling adult financial decision-making in a child...that’s quite challenging.
AMM: And this is the theme that runs through your books?
AMM: Not only the spending, as I understand it, but also the effects?
MCH: Absolutely. So there are two themes that are really very very close to my heart. The first has got to do with equality and the second has got to do with sustainability. And these are two themes that I really wanted to bring to children. And indeed at the beginning, friends’ reactions on the first book, which is about earning your pennies and equality. Why would a little girl earn a penny less than a little boy for the same chore?
And many people ask me: why do you need to talk to children about that? And I tested it out with my own daughter who’s now 13 (she was 12 at the time.) And I said, have a look at this little story and tell me what you think.
She reads it and says “Oh it’s really cute but I don’t get the point. Why would a little girl earn less than a little boy?”
AMM: Yes and the parents...and one thing that..again a takeaway from the book is that..and from many...a lot of research out there...that it starts not only at an early age but in the environment, in the home and the behaviour that’s learned from the parents.
MCH: Yes, absolutely. Unfortunately, there’s a lot of research that also shows, when we talk about pay gaps...usually, we tackle this from a business perspective. We think about it in terms of people’s adult life.
And that also led me to reflect because I said that means that we as parents are actually perpetuating the patterns that have led to the inequalities today without even realizing it. Nobody does it with bad intentions. Nobody would discriminate their own daughters but they are being steered towards either more unpaid chores or chores that are just valued less...if they’re getting less overall. And we’re not teaching them to negotiate.
AMM: I think that’s a whole other conversation. My eight-year-old is quite the negotiator but then we do have to steer her in that direction in terms of negotiating when she’s older.
But something that comes up in the first book is this idea and it’s fundamental is this idea that children are compensated for the work that they are doing.
AMM: So that little girl on your story does separate chores in the house and she gets money for this and then she saves it. I have to tell you that sparked quite the debate at my dinner table because...you know my husband is raised in a way, in which he feels that family...you shouldn’t be paid for chores that you do for family. Children should not be taught to expect always compensation for doing things that they should do anyway.
So how do you reconcile this?
MCH: Correct. So the jury is really out on that one. And I also do believe that we need to teach children that there are certain contributions to family life and to a household where you do not get paid for that. That is part of being a family.
But there are probably also chores where one could say “This is a chore for which you might get some extra pocket money if you do it if you do it well.” because it’s a learning opportunity and that’s what I think the conversation is really about. It’s not about you know, saying every single chore needs to have a price tag.
AMM: And it’s quite the negotiation that they place there. And if we look at savings, I have to say I kind of giggle to myself because you have a whole book on savings and again it comes up on the first story and then it has its own story…
But reality is we don’t even get an interest rate on savings accounts at the moment.
MCH: I know, I know.
AMM: So how do you reconcile this? Sure it’s good to put your money away but if you don’t get anything in return…
MCH: That actually breaks my heart, and especially as an economist. The fact that we are at a negative interest rate environment is actually pretty much a tragedy if you ask me. Indeed, book 2 does try to explain the notion of compound interest to children in a very easy and playful way. I believe that it is important because ultimately that is what will allow people, over a very long time horizon, to make such a difference in the way they manage their money.
Now it’s true that today, you cannot generate returns just on a savings account, it needs investments for that to happen...and maybe to explain investment to a 5-year-old child is stretching it a little too far.
And the way I try to explain it is: “money in a piggybank cannot work for you so you need something more.”
AMM: Which can be short-term or long-term but…
AMM: Another interesting distinction, which I think is very applicable to these generations and it wasn’t to ours...is the idea of digital money.
AMM: And...I think it’s such an interesting distinction to make.
MCH: Yes, it is. And indeed the third book on spending has a hidden chapter for that reason.
And the same way you actually can’t touch digital money, you cannot touch the chapter on digital money so it’s actually only digital to try to make the point to children that you know...it is abstract and you need to learn about these abstract concepts. And that is again why I think these conversations around money and around digital money do need to happen early because digital is part of children’s lives so early.
AMM: So now, you’re going to have to do a chapter on cryptocurrency?
MCH: Possibly! Indeed that is already in the back of my mind for 2020. Let’s see.
AMM: That will be a bit challenging...explaining blockchain, et cetera.
MCH: Very challenging.
AMM: And now you’ve really...and now this idea of making smart choices with your money and addressing the sustainability, the planet, the sustainability development goals.
MCH: Indeed. So at the beginning of the journey was talking about values and talking about equality and the end of the learning journey is really about sustainability.
So if we get children to grow up over the next 10 years, knowing that we can do better for the planet, I think that’s a good thing.
AMM: Now if we want to broaden out quickly as we wrap up the topic of financial literacy around the world, which we know is a challenge not only for women, but also for men. I mean in general, there is still so much ignorance.
What can be done?
MCH: Look, I think we just have to broaden out these conversations everyday a little bit.
I remember having seen research that shows that on aggregate, financial literacy seems to be lower than it was 30 years ago.
So I ask myself the same question: what is happening?
AMM: We have more access to information, right?
MCH: Exactly. And I think that’s part of the problem because the information is out there. There is a whole digital world of information that you can tap into if you want to that I think the necessity to teach these topics has dropped a little bit off the priority list and I personally think that we need to go back and fix that.
Because data is showing that we are less and less knowledgeable about long-term financial decision taking and the implications of long-term financial decisions. We can’t afford not to have that knowledge in a world where we’re going to live decades longer than the generations did 30 years ago.
AMM: Can we, then, help lift people out of poverty with financial literacy? Is this a tool that can really move that forward?
MCH: I think it’s a tool that can complement all the efforts around lifting people out of poverty because clearly, there’s the whole topic about economic value creation, creation of employment to lift people out of poverty. But once they have access to decent employment in order to be able to manage money in a way that they understand the long-term life implications.
I’m concerned about old-age poverty. I think that these conversations, both with children at the starting point (no child is going to be thinking about “where will I be by the time I retire?”) but also with adults, and to engage parents in these conversations so that they all can reflect for themselves on “Hmm, have I really spent enough time thinking about the implications for me?” I think is important, because old-age poverty risks being a female problem because the women are just going to live even longer.
AMM: Absolutely. What about Switzerland? Where is Switzerland in this landscape?
MCH: If I’m not mistaken, Switzerland scored something like 57% on financial literacy overall and the countries that are best in mark scored 70-70+ so I find it a little sad that as one of the leading financial places worldwide, our own country doesn’t score higher and I would really make a plea for saying that I think financial education is something that needs to be in the DNA of our country. It needs to be at the core of our education systems as well. It certainly needs to be something that accompanies us on every level. Not primary school, not just secondary school, not just when people start their active life.
I think it has to be a lifelong conversation.
AMM: As we wrap up, I wanna take you back just to the moment where, I think it happened at Davos at the World Economic Forum, where you had that “aha!” thing and said “this is what I wanna do, I wanna write these books. I think this is the way to go to address financial literacy especially for girls.”
MCH: Indeed. The whole topic of female financial confidence was in the spotlight because we realised that the consequences of pay gaps on wealth gaps are so important. If you look at all the other aspects that influence a women’s financial well-being over her lifetime, there are so many considerations where we need to better educate or involve women and increase their participation.
But it was a comment made by Shelley Zalis, the CEO of The Female Quotient, in Davos; when she said
We essentially really need to start at the age of 5. That’s what made me want to find a way to make this fun for children and I thought “Fun? It needs to be in rhymes.” And so that’s how the books were all written in rhymes.
AMM: Alright, wonderful. Mara, thank you so much for joining us today and for sharing your story.