I’ve been fortunate enough to have been interviewed by Ana Maria Montero of CNN Money Switzerland, where I got to talk about my advocacy for financial literacy for young girls (and boys.)

In this interview, I got to share the statistics and motivations that got me to creating the  “Smart Way To Start” book series.

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?

MCH: It’s important because of longevity. Very simply speaking, we are going to live much longer than we thought we would. Our children are likely to live to the age of 105, maybe, with the medical advancements today. And I look at that’s and think: that’s wonderful. How are they going to be able to afford living to the age of 105?

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?

MCH: There is, actually. There’s also research that points to two things and that is: that confidence is largely shaped by the age of 5 and that money habits as an adult are largely shaped by the age of 7. So that really means that it is in primary school age that children’s attitudes towards money are formed.

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.

MCH: It is challenging but money is something that surrounds us every single day. Every time a child wants to buy sweetie or a toy or a drink…so I don’t think it’s ever really too early to familiarise them with what is the value of money but also what are the values that you are transmitting with every financial decision you are taking.

AMM: And this is the theme that runs through your books?

MCH: Yes

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?”

And so that made me realise that today’s generation of girls does not know that they are going to face the same problem as my generation. I also grew up thinking the world is fair and that we’re all equal and that the only limitation to my future would be my own intellectual capacity and my willingness to learn and to adapt..so I didn’t there there was going to be any sort of disequality topic that I would be confronted with in life. And I think girls today also grow up with the naive belief that everything is gonna be fine and they’re not equipped with the skills needed.

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.

But there’s lots of research that shows that pay gaps are already visible with pocket money. By the age of 10, there’s already a discrepancy that can be anywhere between 10 and 30 per cent and this is across many, many countries.

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.

MCH: Yes.

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.

But it is about giving the children the opportunity to learn to earn money, to save money, and spend money wisely so we need to give them a framework where they feel they can control that. They can do a task, they can do it well, and they can get a reward for it that they can then decide “What am I gonna do with the money I’ve earned and how am I going to manage it?”

It’s really about giving them a platform to learn. 

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.

But I do believe that the concept of compounding over time, the concept of “if you let your money work for you, it will grow over time.”

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…

MCH: Yeah.

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.

MCH: Yes

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.

So, once you explain to a child all the tradeoffs of spending now, spending later, saving more, buying something cheap or buying something more expensive and looking at quality; the question of digital money really is so important because you realise that those tradeoffs are so much faster to make in a digital world where it’s just a swipe or a tap and the money is gone but the amount of time to earn the money is still going to be the same. It’s not necessarily going to be faster or easier.

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.

Why?

Because if we’re going to teach children how to earn money and what it means, why don’t we also explain to them that spending money has an impact on our planet. Every single money decision on a daily basis has an impact on our planet. And if we want to change the impact that we’re having today; if we want money to be a force for good, well it’s not just about all of the investment decisions we take or all of the consumption decisions we take as adults but it’s about creating that awareness already with children that every single money decision that even they take has an impact. 

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

“Confidence is shaped at the age of 5.” And, indeed, I went to research that and it’s founded. That’s when I realised that if we tackle the problem only with adult women, we tackle the problem 20 years too late.

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.