Two facilitators of MoneyMinded shared the information about how to develop a SMART (specific, measurable, achievable, realistic, timely) plan for the future to the program participants in The Learning Farm, Cipanas, West Java.
Improving Lives and Securing Better Futures With Financial Literacy
AUGUST 13, 2015
Since increasing numbers of Indonesians are entering the middle class for years to come, thus proliferating purchasing power and disposable income, financial literacy has become a necessity to manage personal finances and to guarantee a comfortable life in the future.
Financial literacy signifies someone’s total comprehension and awareness of financial matters, especially those of a personal nature. The lack of financial literacy can lead to poor financial decisions that can adversely impact an individual’s financial health. Nevertheless, evidence from a 2013 survey on financial literacy conducted by the Financial Services Authority (OJK) in 20 provinces across Indonesia with 8,000 respondents indicates that Indonesia has a relatively low financial literacy rate.
The survey showed that Indonesia has a 21.8 percent financial literacy rate, as well as a 59.7 percent financial inclusion rate. For respondents with a low-income level or those in the C, D and E social economic brackets, the financial literacy rate is 18.71 percent.
The survey also revealed rather low ratios of people who use financial services and products, which signifies that great potential lies in promoting wider use of financial services and products. The highest rate of financial inclusion to various services and products, at 57.28 percent, is with banking products, followed by insurance at 11.81 percent.
To increase Indonesia’s financial literacy, OJK has launched a national strategy two years ago. Launched by President Susilo Bambang Yudhoyono on 19 November 2013, the national strategy aims to increase Indonesia's financial literacy rate by two percent per year.Agus Sugiarto, the director for literacy and education at OJK, said that the financial literacy rate improvement strategy is also aimed at preventing people from fraudsters who prey on people with disposable income by persuading them to invest in their bogus scams. ANZ, one of Indonesia’s leading international banks, is also taking part in the strategy to introduce and promote financial literacy to people, as well as to expand financial inclusion among Indonesians, as ANZ recognizes the importance of people having access to the banking system and the capability to manage their money and savings.
ANZ believes that money management is a life skill that helps people make the most of life opportunities, and with the knowledge, expertise and experience they have, ANZ is focusing on improving the public’s basic financial knowledge and skill, since this will consolidate people’s confidence in using financial products and services.
As a part of its commitment to participate in educating Indonesians about financial literacy and to help build money management skills and savings of disadvantaged groups in their immediate communities, ANZ presents MoneyMinded, which is a financial literacy program developed by ANZ Group and is considered the most widely used resource to help build financial capability in Australia.
The program has garnered more than 200,000 participants in Australia, New Zealand and Asia Pacific and it was introduced to Indonesia in March 2012. More than two years since its launch in Indonesia, MoneyMinded has listed more than 1,500 participants in the country as per December 2014 with 39 ANZ staff and 35 partner organizations staff trained as volunteer facilitators.
In Indonesia, ANZ is focusing its work with non-profit organizations that support young adults and women who are not currently banked by the financial system. For its program in Indonesia, MoneyMinded is a suite of financial education resources comprising of six topics, which can be tailored to meet the needs of individuals and groups.
The six topics are how to plan the future, how to make money last, how to differentiate needs and wants, how to budget, how to say no and how to make commitments. The program includes activities and guides for facilitators as well as teaching tools to support the participants’ education.
A survey conducted to measure the results of this program showed that it has been indeed successful in helping the participants save money and plan their financial matters, therefore boosting their optimism towards their future finances.
The study found that out of 152 respondents, 98 percent of them now have a sense of being able to manage their finances after participating in the program, while 57.9 percent can start saving their money and 54 percent can set aside more money into their savings. Almost 60 percent of the respondents believe that they now have a better outlook on their future after participating in the program. 85.2 percent of the respondents said that they now feel more confident with managing their money and feel that they can implement the knowledge they acquired from the program for better financial managing in order to achieve their goals.
These results showed that the MoneyMinded program can be very effective in empowering people by improving their financial literacy for that they can enjoy a much better life.