Two-year-old children cannot naturally distinguish the difference between what they simply ‘want’ and what they ‘need’. Unfortunately, the same can be said about many adults when it comes spending and saving.
Renee, Project Leader for the NGO Education Delivery Centre (EDC), is working to change the culture of personal finance in her country of Mongolia, teaching adults how to save as well as shaping the thinking of childrenas young as two.
On a summer day in late June 2017, Blue Sky Aviation (MAF in Mongolia) flew a team from EDC and the Mongolian Sheep Association to the rural town of Tosontsengel for a day of community development training.
Renee and her colleague planned a seminar on personal finance for adult women and another for teenagers, while two men met with a group of herders to speak about improving herding practices for a better future.
Blue Sky Aviation works with province administrators to provide highly subsidised flights for medical and development purposes such as this, allowing the team from the capital to complete their seminars and return the same day versus a full day of travel each way by road.
About 35 women and a few men gathered in a large auditorium in Tosontsengel for Renee’s session on financial savings.
Using a PowerPoint presentation plus three traditional Mongolian savings boxes in graduated sizes, Renee spoke to the group on how to save, what percentage of their income should be set aside for necessities and future needs.
After the training, Renee reflected on the response she felt from the attendees. Everyone agreed that they wanted to make changes, Renee said, 'But when I asked, "Are you ready to make those changes now?" only two people nodded their heads. I can tell they want to make changes, but they don’t know how. I left my phone number and told them if they need me, if they really want to make changes, they can contact us.'
And people do call the organisation. 'Constantly,' Renee affirms. 'Per day I’ll receive about 30 to 35 phone calls, mostly housewives who are not working yet and looking after the kids. They call and ask for the training, and want to talk. We especially work with the wives because the women can be influenced up to 47% more than the men.'
The Financial Literacy of a population – the knowledge, skills and determination to act in one’s best financial interests – is important to the overall economic well-being of a country. A World Bank study in 2012 showed that many Mongolians have a limited understanding of the basic financial concepts required to make savings and investment decisions. The majority of survey respondents paid more attention to their current situation rather than saving for the future, particularly herders living in rural areas. The Mongolian government understands the need for a national financial literacy program that would include education for school children and rural residents.
'If you have any obstacles, just call us. We’re going to encourage you, and cheer you on to continue with the savings!' Renee
In 2006, Renee’s mother, Ph.D. L. Oyun, a professor of banking and finance at the National University of Mongolia, started EDC with the focus of training citizens how to build up savings for the future. Since women tend to be more proactive than men, she concentrated on household financing, educating housewives how to manage their money and teach their kids as early as possible to distinguish between needs and wants. Following an education and work experience abroad, Renee, also with Ph.D in finance, now carries on her mother’s work.
Renee has many stories of lives changed by the financial training, but Tsetsegee stands out, a cleaning lady at a school who made only £81 a month when she first came to EDC for training. She wanted her two grown boys to attend university but didn’t have the money. Five housewives attended the training together over several months, one quite wealthy and Tsetsegee the poorest. One part of the training required the women to set aside 3000 Tugrik (about £1) every day as savings. To motivate them, it was set up as a competition: the one who followed through on the daily savings received a monetary award from the ones who didn’t. Tsetsegee alone accomplished the task.
Tsetsegee’s husband was an alcoholic when she began the training but through her influence he stopped drinking and got a job as a driver. Tsetsegee now runs her own small recycled collection business, is putting her two boys through university, and has bought the family a ger (the Mongolian version of a yurt).
'It’s amazing,' Renee says. 'I’m proud of her. We really truly helped with her life.'
Challenges and Solutions
However, changing the way people think and long-established habits does not come easily. 'Mongolians believe you should have enough income to save,' Renee explains, 'but we don’t think that. As long as you’re earning or making some money, just put up to 5%, or even 3% in savings.'
Although participants in a training session love the ideas put forth, they don’t all have the discipline to follow through. 'They’ll do it for the first week. The second week it will be quite difficult, and from the third week they will just lose it. That’s why we always give the phone numbers and say, "If you have any obstacles during your time, just call us. We’re going to encourage you, and cheer you on to continue with the savings."'
For this reason, EDC is committed to starting financial literacy at a young age through education in the schools, raising up a generation that can distinguish wants from needs and be financially responsible. 'The government and Central Bank of Mongolia want us to reach the high schoolers with our new curriculum and teacher’s guide,' Renee explained. 'We’ve published 14 handouts for adults and kids, and published the nationwide curriculum for financial literacy.' EDC currently has 24 trainers with the goal of training every schoolteacher in the 21 provinces of Mongolia. 'If we start training the teachers and kids in 2016, we’ll receive the outcomes five to ten years later.'
Children, then, are the key and according to Renee they are the easiest to teach. Using traditional wooden boxes in three sizes, money is divided between savings, spending, and sharing. 'It’s the easiest thing,' Renee says.
Blue Sky Aviation provides highly subsidised flights allowing the team from EDC to complete their seminars and return the same day saving a full day of travel each way by road.