Adam Smith writes, ‘There are no public institutions for the education of women. They are taught what their parents or guardians judge it necessary or useful for them to learn, and they are taught nothing else.’ Educating woman earlier may have saved us all a lot of trouble.
DEFINING IDEA…
Women’s battle for financial equality has barely been joined, much less won. Society still traditionally assigns to woman the role of money-handler rather than money-maker, and our assigned specialty is far more likely to be home economics than financial economics.
~ PAULA NELSON, WRITER
It’s obvious from the tone of The Wealth of Nations that it was written at a time when women didn’t concern themselves with talk of finance. According to the men of the day, it would have been beyond them, anyway. For centuries, women have endured prejudice regarding their ability to manage money. Even as recently as the 1970s, they have been systematically rated less credit-worthy than men. Just how unjustified is the airhead, spendthrift stereotype can be demonstrated by the success of microfinance.
Microfinance was founded by Nobel Prize winner Professor Muhammad Yunus, who realised the potential of making small loans to women when studying poverty in his native Bangladesh. He founded the mutually owned Grameen (‘Village’) Bank in 1983. As of November 2008, Grameen Bank had 7.64 million borrowers, 97% of whom were women. With 2,536 branches, the bank provides services in 83,415 villages, covering more than 99% of the total villages in Bangladesh. Most of these loans are to women without any collateral. What they do have, however, is pride and determination. Since its inception Grameen Bank has made microloans worth more than $3 billion and is perhaps one of the few banks in the world unscathed by the financial crisis of 2007/08.
Grameen Bank says they focus on women because they are often, ‘neglected in society. Through the opportunity of self-employment and the access to money, Grameen Bank helps to empower those women. In addition, studies have shown that the overall output of development is greater when loans are given to women instead of men, as women are more likely to use their earnings to improve their living situations and to educate their children.’
From the slums of Bolivia to Nairobi to villages in India, the microfinance model has been taken up around the world. The money is often used to buy livestock or start micro businesses. What makes it work is the borrowers’ genuine pride that comes from taking their financial destiny into their own hands. Not only does microfinance provide families with a way out of poverty, it does so while flying in the face of convention. According to traditional banking the poor are a bad credit risk, yet the loan default rate in microfinance is significantly lower than traditional banking!
Smith says, ‘In every part of her life a woman feels some advantage from every part of her education.’ If that education includes money management, then he is correct.
HERE’S AN IDEA FOR YOU…
Give your kids a financial education and teach them the basics about money regardless of gender. Make sure they understand the devastating consequences of debt. It’s far better for them (and for you) if they learn from an early age how to be financially prudent.