Insights and directions for sociological approaches to saving: The case of a Financial Education Programme for children in Portugal

Introduction

Financial education programmes (FEPs) – Social Marketing initiatives (Ribeiro and Soares, 2015) to capacitate consumers to better managing their household budgets, prevent indebtedness, increase savings and plan investments (Lusardi and Mitchell, 2013) – have multiplied worldwide in response to the recent contexts of financial and economic crises (Speer, 2013). Since 2007, a widespread belief that lack of financial knowledge contributes to overspending, indebtedness and bankruptcy has taken over public opinion (McCormick, 2009). In this regard, Cohen (2007: 63) proposed ‘equal treatment’ for households’ financial problems in the scope of expanding sustainability issues and policies – sustainability being, for the author, a development process towards ecological integrity and global equity requiring a balance juggling environmental, economic, and social equity goals (Cohen, 2007: 58). Concerns about household’s finances as cornerstones of sustainability fed the idea that the teaching of financial concepts was important, beneficial and desirable for consumers (Organisation for Economic Co-operation and Development/International Network on Financial Education (OECD/INFE), 2012). FEPs have thus been encouraged for providing consumers with financial literacy – a combination of financial knowledge and skills for attaining financial well-being (Knoll and Houts, 2012: 383) – influencing the public to voluntarily change financial behaviours for the sake of sustainability (Lusardi and Mitchell, 2013).

Despite the proliferation of these programmes and the regular involvement of many Sociology of Consumption’s scholars in sustainability debates, there seems to be an absence of sociological knowledge about FEPs, which have, in turn, not yet been the recipient of sociological attention (Ribeiro et al., 2013). So far FEPs have been grounded and assessed on economic and psychological terms, not much attention being paid to social actors engaged in social relations as agents of financial behaviours (Kiviat and Morduch, 2012). Also, much research dedicated to such programmes has been pervaded by a tone of normativity as to what consumers should learn and how they should behave (Willis, 2011). Time is ripe for a critical analysis of FEPs to be undertaken from a sociological viewpoint, mainly as we cannot envisage that sociologists of consumption could ignore any concerted measures targeting consumers. This article proposes a sociological appreciation of FEPs and suggests future directions for the sociological investigation of financial decisions. Our research question is as follows: what questions do FEPs raise in the scope of Sociology of Consumption?

Particular interest is given to the study of FEPs aimed at children for three reasons: the growing interest of researchers in children as consumers, the relevance of children in FEPs’ initiatives, and one of the authors having had access to an empirical study about an FEP for children. Research emphasizes the power of children as purchasers and influencers (Cook, 2008), as well as their ability to use consumption as a relational instrument (Pugh, 2011). Besides, children also work as a sort of emotional bait for attracting the attention and goodwill of adults (Keller and Kalmus, 2009). Sustainability-oriented policies and initiatives often address children because they are potential, in-training consumers, with growing centrality in family and socioeconomic spheres, and therefore priority targets for FEPs (Lusardi et al., 2010). Significant advances in the research of the participation of children in consumption processes, including financial decisions and savings, have been attained in recent years (Ruckenstein, 2010). Still, the organized efforts for targeting children with financial concepts and instructions encompassed in FEPs fail to have been sociologically analysed.

We aim at contributing towards raising the awareness of academics, policy makers and consumers’ defence movements to important aspects that might lead to rethinking the idealization of FEPs as instruments for promoting sustainability, especially when targeting children. It is also our objective to encourage scholars, particularly within Sociology, to pursue more research projects about financial decisions – how they are formed, developed and practised from early childhood, how they relate to sustainability and what is the role of FEPs in such contexts.

This article begins with a methodological contextualization of our objectives and how the possibility of studying the implementation of an FEP in two schools in Portugal in 2011 was converted into a research opportunity. The first section covers a brief literature review about the proposals of FEP and is followed by the description of the FEP used as a case-study. The second part identifies the gaps in the literature so as to notice both the lack of sociological insights in FEPs’ designs and procedures, and the absence of financial decisions in Sociology of Consumption’s recent works. Finally, a few sociologically framed reflections will be made.

Methods

Bearing in mind the research question ‘what questions do FEPs raise in the scope of Sociology of Consumption?’, the objectives of this article are to characterize FEPs’ designs and procedures, to identify the lack of sociological knowledge as regards such programmes, to discuss the little involvement of sociologists of consumption with financial decisions, and to propose future developments for such an approach.

Although this article is mostly dedicated to theoretical debate, a practical approach to a Portuguese FEP implemented in two schools in 2011 revealed to be very useful to a broader understanding of the breadth and depth of this type of initiative. By means of mutual academic acquaintances, a teacher of a Portuguese primary school, who was seeking scientific help to develop and implement a research project about children and savings, made an invitation to the researchers. A mixed-methods approach was used to study children’s main perceptions, cognitions and practices regarding money, consumption and savings (Ribeiro et al., 2013).

Coincidentally, this school had also recently negotiated with a Portuguese private Bank the possibility of hosting the latter’s pilot FEP initiative, which was scheduled for the following month. Our original research purposes were thus widened. Not only were the children’s daily perceptions and practices still interesting to researchers, but the implementation of the FEP itself also became a relevant research question. Therefore, the Bank was asked permission so the researchers could observe the FEP sessions and apply questionnaires to children after the programme’s implementation. After permission was granted, the researchers were offered the possibility of studying another school where the FEP was also being implemented simultaneously (Ribeiro et al., 2013). The population under scrutiny included 245 children aged 8–11 years, attending two primary schools in the Lisbon area, Portugal. The first, located in Penha de França, is socioeconomically characterized as lower middle class, with mostly blue-collar, unemployed and immigrant family backgrounds. The second, Salesianos, in Estoril, some 20 km far from Lisbon, is a private school attended by children of affluent, upper-middle-class professionals. Although this was never formally established, the researchers agreed to share the main results of the study with the Bank in reciprocation for the authorization to watch the FEP’s implementation process. For honesty’s sake, results, including the pre-study, were shared a few months after the programme ended. Ethical procedures including anonymity and confidentiality were respected.

From March to June 2011, both schools were targeted by the Bank’s FEP. After analysing the findings of these processes, an ulterior, wider research, aiming at getting more information about FEPs worldwide, was undertaken by the authors. Results from this research are incorporated in the next sections.

FEPs for children: An overview

Financial education is

the process by which financial consumers/investors improve their understanding of financial products, concepts and risks and, through information, instruction and/or objective advice, develop the skills and confidence to become more aware of financial risks and opportunities, to make informed choices, to know where to go for help, and to take other effective actions to improve their financial well-being. (OECD/INFE, 2012)

FEPs have traditionally been rooted in the United States since, at least, the 1980s and their number has expanded substantially after the global financial and economic crisis of 2008 (Speer, 2013). Initiatives of a similar nature have also been documented within the European Union and in other countries (see the OECD’s International Gateway for Financial Education and the Jumpstart Coalition’s websites). Many of these mechanisms for financial education concern children and young people. Classroom teaching tends to be the favoured resource chosen by FEPs, the mass media following close behind (Walstad et al., 2010).

The contents those programmes transmit to children focus on notions of money, transactions, debt, credit, budgeting, planning and managing household finances, with savings apparently being the major topic (Davis and Durband, 2008; McCormick, 2009). In an OECD publication, the importance of savings and investments – savings being the difference between household disposable income and consumption, and investment the asset allocation to generate productive growth from long-term savings – was particularly stressed in relation to personal financial well-being and economic growth (Lewis and Messy, 2012: 38–40). It was further stated that

Knowledge and understanding of saving and investment concepts is particularly low in many countries. In addition, there are behavioural and cultural factors which may limit people’s propensity to save. As a consequence, policy makers have developed several strategies to influence whether and how individuals save. (Lewis and Messy, 2012: 4)

A private FEP for children in Portugal

Portugal was severely hit by the recent economic crisis. Ribeiro et al. (2014) identified about 40 initiatives of financial education held (or still ongoing) in Portugal since 2006. These have, mostly, been promoted by financial (for-profit) institutions, namely banks, insurance companies and their associations.

Internal organizational documents of the Bank used in this research that, though not public, were shown to the research team, referred that the programme’s broad objective was to increase the sense of financial responsibility of individuals, families and communities, thus contributing to sustainability. The FEP aimed at introducing children to financial and economic concepts of daily life including work, wages, money, savings, debit and credit, banking. It also sought to foster the need to stimulate savings and avoid borrowing. The project comprised four steps undertaken by a team of two volunteers from the Bank. Teachers offered some of their in-class hours to accommodate the in-school sessions and accompany their pupils on the outdoor activities that were part of the programme.

The first step, titled ‘how can we save money?’, was an informal 90-minute course lectured by the Bank’s team. This classroom lecture, supported by a PowerPoint presentation with short sentences and colourful images, explored the following topics: ‘What is money? What is it used for? Where does it come from? What spending priorities should be established? How is it possible to save?’ The volunteers and the teachers made the effort to adapt their financial jargon in order to be intelligible to the children. The second step, involved the same volunteers reading a story named ‘Mrs. Thrift and the Garden of Values’, which was taken from a didactic book offered to each class. The book highlighted the importance of the values of thrift and caution when dealing with money. Based on their own interpretations of the message, and aided by their teachers, children were invited to produce a script and dramatize this story in class. The written and drawn outcomes of this session were afterwards offered to the Bank’s team.

The diagnostic research, conducted by the authors immediately before the FEP, revealed that the matters taught by the Bank did not surprise the children. More than 85% of children were involved in regular shopping activities and were aware of brands and prices. Children often received money from their relatives, who told them that earning money required hard work. Concomitantly, having a job emerged as the consensual option for obtaining money. Not only were the children already familiar with these ideas, they also found the Bank’s pedagogical contents narrower than their own representations: while the Bank transmitted monetarist notions of money (bills, coins, bank accounts), children counter-presented broader definitions of money, including instrumental and symbolic uses (the possibilities of ‘buying things’, ‘paying for the bills’, ‘offering gifts’, ‘helping other people’, ‘being happy’).

The Bank stressed the message that money should be saved. However, saving seemed already of imperative importance for children and their parents with the majority of children saying it was important to save money because their families told them saving is essential. Most children believed that those who save have a better living than those who do not. About 70% of children had a piggy-bank. Savings were managed as a common objective of the household and children encouraged to participate. Such objective appeared to have a relevant role in reinforcing family ties. Some children even commented that their parents should save more.

Saving strategies (resumed in stage four) were proposed by the Bank. These included making shopping lists, comparing prices before buying, preferring cheaper items and resisting temptations (candies and soft drinks, for instance). According to the Bank, money thus saved could be used for future spending in education, for helping the family, or for making expensive and durable purchases such as a house. Leisure, holidays, new cars or cell phones were presented as superfluous. Although the Bank’s FEP delivered the same contents in both schools, the pre-study revealed a sharp difference in children’s ideas on the uses of money originating in their socioeconomic background. Children from more disadvantaged households prioritized the payment of grocery and household bills whereas children of more affluent families thought firstly about savings. The former were more prone to seeing money as a way of helping others and the latter concentrated on their own goals instead.

The third step, still led by the Bank’s volunteers, followed with a visit to one of the Bank’s agencies. The aim of this step was to explain how a bank functions and children could thus learn about bills, coins and ATMs. The fourth and last step consisted in a visit to a shopping mall and included a simulated shopping experience at the local supermarket. Children were divided into groups who were each given a €100 plafond (understood here as a limit for expenditure). Their assignment was to fill in a shopping cart with products that should suffice for the needs of a household in a 1-week period. At the end of this real-staged experience, each team proceeded to the cashier. Their respective shopping carts were registered and the amounts summed and compared. While the visit to the Bank agency was mostly informative, the supermarket experience was lived by the children as an opportunity for having fun. It soon became obvious that children were not concentrated on their ‘main’ task. Instead, they were putting their ‘dream buys’ like cereals, candies and soft drinks in the cart and enthusiastically shared their thoughts on brands (which were the best and why) with one another. After a while, they forgot about the restrictive indications taught in the former FEP’s sessions. The simulated cashier registration revealed that the €100 limit was seldom respected; still, the volunteers and the teachers accommodated well to the situation and kept their spirits up without reprimanding the children.

A workshop with the volunteers from the Bank immediately followed the shopping activity. The workshop addressed family budgets, shopping lists, price comparisons, distinction between essentials and luxuries, healthy eating and environmental matters. The sources for the selection of these contents were not revealed, but the messages stressed moral disapproval of indulgent and expensive consumption choices. Cheap buys and distribution-owned brands, for instance, were praised by the Bank’s volunteers during the workshop. Children were told to prefer substitute products, like water instead of ice-tea, as such choices would help reduce the bills. Indulgence appeared to be ‘forbidden’.

The post-study revealed that all classes, even those not engaged in the FEP’s sessions, showed an increased awareness to the topics of money, shopping and savings. Responses stated, more clearly than before, that savings should be started immediately. Educational goals (e.g. going to university) came out as priorities over other consumption choices such as cell phones, computers, cars. Notwithstanding, strategies to save, topics given particular relevance by this initiative, were still unclear. Keeping the money in the piggy-bank and avoiding spending it except for basic necessities maintained top positions in the preference rank. In contrast, favouring cheaper buys, comparing prices before deciding, creating a shopping list – practices that had been recommended by the FEP – remained inexpressive (less than 10% in all classes). For the children, avoiding debt would be attained simply by not spending the money earned.

Towards a sociological understanding of saving: Theoretical contributions and work in progress

Summarized in the preceding sections, the results of the theoretical and empirical research can be used to identify some of the advances and shortcomings in the literature. Aspects in FEPs’ rationales where sociological knowledge remains surprisingly scant need to be highlighted (even if, for the most part, they could be easily addressed by sociological literature already available). This analysis will lead to a broader reflection on the importance of financial topics for Sociology. Simultaneously, questions that remain unsolved and the possibility of addressing them in future research can be further carried out.

Concluding remarks and future avenues of research

At a time when initiatives for encouraging saving are increasingly active in addressing consumers, and children as priority targets, for the alleged sake of sustainability, the attention of academics, policy makers and consumers’ defence movements should be drawn towards the incomplete and judgemental understanding of financial decisions that has been prevailing in the scientific and in the public spheres. By analysing the implementation of a particular FEP for children, we intended to broaden the scope of research concerning savings, a topic still vastly outside the radar of sociological investigation.

Overall, literature review on this topic demonstrates that sociological research is already in possession of relevant findings about social aspects and processes of financial decisions that allow for a better understanding of how consumers, and particularly children, learn about and act in relation to money, consumption and savings. Sociological insights might be useful for diagnosing social contexts, structures and practices of financial decisions and financial education. In this light, financial decisions and financial education research projects could be developed under, for instance, practice theory approaches. There has been renewed interest in this research trend which is equipped to understanding non-consumption as a practice among other consumption practices and to recognize the interrelations that might be established between them. Besides, theories of practice also consider multiple individual and social factors in their analysis, which appear beneficial for improving knowledge about FEPs. Researchers have the opportunity to investigate social processes and practices related to financial decisions and the ways through which these could be potentially changed, as is already being developed in the environmental and ethical spheres.

Furthermore, when analysing financial issues, the practices developed by consumers in order to isolate money from the budget that was meant for spending could be further investigated (there is information on how children are doing it but not much is known about these habits in adults). Social and institutional aspects that concur to or go against the concretization of savings could also be deepened. That is, what role do groups, organizations and media influences, pressures and constraints play on the person and their intent to save (besides those individual factors already considered by Economics and Psychology). The impact of FEPs in such regards could, consequently, be sociologically assessed.

Other possible topics for future research may include the social preparation of saving and investment decisions and the actual choices for possible applications of money (on account of socialization, through social networks, under the influence of the media, by formal education). FEPs appeal to formal savings and investment choices, but scientific research should acknowledge informal possibilities as well. The allocation of money for savings and investments can owe to social networks and influences (in the form of imitation, routines, advice or advertisements) that deserve proper investigation. It should be noted that savings, in strict sense, are prone to be practised habitually and without much thinking if household conditions allow it. Investments, on the other hand, require a more structured commitment from consumers.

Also, the uses of the money saved might pose interesting challenges to researchers since little attention has been devoted to particular spending practices of money that was intentionally saved for a purpose. It is possible that this kind of consumption derived from savings is embedded in specific emotions, symbolic meanings and social relations, not to mention different products and services that would have not been bought if the money had not been saved. From another perspective, money spent differently from what was planned could also call for the curiosity of social researchers to look into the social aspects that might have contributed to that and which social consequences might derive from it.

Other social phenomena that develop on account of savings could also be focused, especially when other people are involved or envisaged by saving strategies (a new car owner invites friends for a ride; a house is bought for the family; a wedding ring is offered to a fiancée). Despite the compelling nature of spending referred by Miles (2011), little is known about the emotional satisfaction obtained by saving, as scholars admitted when claiming that more studies on the underlying motivations to saving are needed (Hamilton et al., 2012).

What our study unveiled is that the study of FEPs is an avenue of great possibilities and that very little has been paved so far. The social motivations, processes and consequences of saving might be considered in discussions regarding agency, status or identity, all of which have interested sociologists of consumption and made this topic one with boundless avenues for social researchers to tread. The study of FEPs, their implementation and overall results, can lead to the finding of valid alternatives to them if it is proven, as our research suggests despite focusing on one sole example, that, although needed, they are ripe with deficiencies. Consequently, if the flaws of FEPs are to be taken into consideration, these programmes might have to be re-appreciated as instruments for promoting sustainability, especially when targeting children.

The implementation of FEPs triggers questions as to the ‘why’ and ‘how’ people engage in saving practices. The importance and usefulness of financial education in the context of saving strategies should be analytically questioned. Financial decisions need to be further addressed if, for no other reason than the persistent global crisis that characterizes our times, new consumption paradigms and new patterns of both spending and saving are emerging as ways of coping with and overcoming the debilitated state of global economies.