Project "School piggy bank": Spending money will be a good lesson

Berlin, 23rd June 2013 – Experts agree: More must be done to avoid consumer debt. The "school piggy bank" project establishes a new approach. The private Munich initiative financed by donations has developed teaching methods proven in practice which bring intelligent money management to parents, teachers und primary school children.  The Federal Association of German Debt Collection Companies (BDIU) supports the project. 

It is bright and cheerful, looks good and helps in educating how to manage money: The see-through "school piggy bank" from the debt avoidance project of the same name is to be found in more and more primary school classrooms and in more and more family homes throughout Germany. The idea has been developed by Stephanie Schmid, a lawyer from Munich, and the photographer Diana Bartl.

The school piggy bank concept is simple and logical and it is for precisely that reason it functions so well. Children can deposit money in the piggy bank in four compartments. All the compartments are linked to practical topics: "Spending", "Savings", "Investments" and "Good Deeds". In this way they learn at the same time as their first experiences in school lessons how to manage their money responsibly – and so are best prepared for the complex challenges which society will present them later with its many systems for spending money, saving and investing.

"We would like to encourage children to think actively as to what they want to achieve with their money," as Stephanie Schmid, one of the two piggy bank inventors, explains the meaning of the project. In her law firm's office she often has to deal with over-indebted clients. So she knows what the consequences can be if money is wrongly managed. In many discussions with people seeking advice a sort of spiralling debt is observed – "a vicious circle, in which more and more money is spent and where parents finally lose control of their financial circumstances," says Schmid.

One in ten adults over-indebted 
The fact that it is a great problem is also known by the debt collection companies. Almost one in ten adults in Germany is considered to be over-indebted. The roots of this problem run deep. "Many over-indebted adults have taken on debts in their early years, be it to pay for a new pair of jeans, new shoes or electronics such as a new mobile phone for example," reports Marion Kremer, Vice President of the Federal Association of German Debt Collection Companies. This has wide-reaching consequences. "If companies do not receive the money owed to them because their customers have lost control of their finances the cost of this is borne by everyone," says Kremer and therefore asks that: "Urgent action must be taken to counter such consumer over-indebtedness as it is toxic for a sustainable economy."

In the experience of 83 percent of debt collection agencies compulsive shopping behaviour is the most frequent reason why young consumers between the ages of 18 and 24 have debts. 86 percent report that young debtors have liabilities to telecommunications companies, and similarly 86 percent name online traders (multiple answers were possible in the said questionnaire). Frequent creditors of indebted consumers between 18 and 24 are also mail order traders (65 percent of debt collection agencies confirm this), Internet service providers (64 percent) and fitness gyms (58 percent).

It is precisely youths and young adults who must be protected according to Kremer from getting into debt situations. "Frequently it is a lack of financial awareness which leads to a situation where people handle their money in a frivolous manner," says the Debt Collection Companies Association Vice President. In the Association survey 75 percent of debt collection companies state that lack of knowledge of contractual commitments, with Internet transactions for example, are the reason why young consumers between 18 and 24 are in debt. Often the problems are merely "inherited" - 72 percent of Debt Collection Association agencies surveyed argue that young debtors have been faced with a poor role model in the parental home.

Poor parental home role model
"If one's own parents' example is to purchase on credit and if the children find it normal that routinely reminders arrive or a bailiff is at the door, their tolerance limit for taking on debt is much lower," reports Kremer. "So it is the task of our educational system to prepare young people for economic life and responsible money management. Schools have a duty, for example in economics and civic studies lessons, to provide practical support for the ever more complex financial environment."

This conviction is also shared by Stephanie Schmid and Diana Bartl. "It is painful to witness when parents pass on their own dysfunctional behaviour to their children so that the spiral of debt continues to spin unhindered into the next generation," says Stephanie Schmid.

Three years ago Stephanie Schmid arrived at a decision: She did not wish to intervene only when it was already too late and the mountain of debt had accumulated to an insurmountable level, but she wanted to take preventive action against youth debt - the school piggy bank project was born!

From Year One
It is the only nationwide debt avoidance project that starts as early as primary school. "Children should experience as early as possible in line with their age and in a practical way how to manage money," says Schmid. "With six to thirteen-year olds there is still a realistic opportunity to assess wrong behaviour in an appropriate manner and to counter this from the outset using teaching methods."

The start was made by a primary school in Unterföhring, a municipality near Munich. Together with Diana Bartl Stephanie Schmid succeeded in winning over those responsible in the municipality for the project. The school piggy bank was used for the first time in the course of a school experiment by the Bavarian State Institute for School Quality and Educational Research. The project was successful and soon other schools' attention was drawn to the initiative.

Even with the first primary school the centre of attention was the eponymous piggy bank itself. The chief attraction for the schoolchildren was: Each compartment can be emptied separately. The piggy is see-through and the children can see how sums of money grow, but also diminish. "The children learn that they can both save and spend money," explains Diana Bartl. "That is absolutely true-to-life. Managing the school piggy bank is quite similar to the way adults should manage their money responsibly."

The project provides participating primary schools with suitable working materials matched to the age of the children. "They are prepared in such a way that in subjects aimed at conveying general knowledge, that is to say German, mathematics, science and religion and ethics respectively, they convey the topics of money, consumer behaviour and values," declares Diana Bartl, who also manages public relations work on behalf of the project. "This imparts to the children a solid multidisciplinary knowledge base on which they can build later."

Promoting values
"With this we want to create a new awareness of values and responsible consumer behaviour," adds Stephanie Schmid. "Many people have a dysfunctional attitude to spending money. And this starts even with children who sometimes feel unable to cope with the temptations of our consumer society," says Schmid.

"Whoever wants to be cool must have terrific toys, be able to show off the latest mobile phone or wear fashionable designer clothes - this peer pressure then leads to indiscriminate consumer behaviour under the motto: If others have an iPhone, then I need one too in order to fit in," complains Diana Bartl. She herself is a single mother and knows how difficult it can be to teach children how to manage the available financial budget properly.

Both women are convinced that children should learn at as early an age as possible that it pays to pause when considering consumer desires and to first reflect and plan before going through with them. The school piggy bank project aims at fostering important character qualities such as self-control and self-discipline, but also a feeling of self-esteem. Social awareness such as social action and the ability to plan long-term are therefore also at the centre of the project's teaching materials. So schoolchildren can learn to first define their own aims and to get clear what is important for them. "If they then manage to attain these goals they set themselves, this is an incredible success experience - for example if they save for the desired designer football boots until they can afford them by their own actions," says Diana Bartl.

Parents and teachers join in
The project brings teachers and parents closely together. In a workshop at the primary school the teachers first get to know the project and the teaching materials in greater detail. "We developed a spiral curriculum which provides multidisciplinary learning material," explains Stephanie Schmid. In addition the teachers find out how to incorporate the four money compartments in the "school piggy bank" into teaching directly.

Diana Bartl knows from her own experience that children often have more respect for their teachers than they show towards their parents. "In primary school teachers are important figures to relate to and who have a role model function," she says. "That is probably quite normal in child development," says the young mother.  For the school piggy bank project this is even to be fostered, as "children often accept things from teachers much more easily than from their parents".

Parents are informed about the project on an information evening. Initially the subject here is primarily money education, pocket money and consumer behaviour. "Many parents are uncertain from what age they should give pocket money and how much," says Diana Bartl. "We discuss quite practical things, for example whether one should use withdrawal of pocket money as punishment." Diana Bartl considers that to be wrong. "Children should get to know that pocket money is a regular source of income - just as the case will be later with wages and salary. If parents use pocket money as a punishment they risk that the children will develop a dysfunctional attitude on the subject of money."

"Frequently it is a lack of financial awareness which leads to a situation where people handle their money in a frivolous manner," says BDIU's Vice President Marion Kremer.

Talking about money
Having their own piggy bank at home also encourages talk about money and consumer behaviour in the family. It reminds children and parents every day of the learning targets and provides support in the everyday learning process on the subject of money.

Each participating primary school receives enough "school piggy banks" so that all schoolchildren and every school class get their own piggy bank. Naturally this costs money just as school equipment with the accompanying teaching material first has to be paid for. In order to finance this, the project has to rely on so-called school sponsors. Stephanie Schmid and Diana Bartl bring interested primary schools together with suitable donors. In addition they coordinate all deadlines, namely for delivery of teaching material and the piggy banks and conduct both the parent information evening and the teachers' workshop.

The Federal Association of Debt Collection Companies supports the project. Vice President Marion Kremer: "This is an excellent initiative for combating debt in a preventive manner and actively engages the children, their teachers and parents. In the end it is such initiatives we need to avoid that more and more people get into debt, so that we finally manage to reduce the number of over-indebted consumers in Germany again. We want to support responsibly acting consumers for these are the customers the economy needs in order to continue to grow, create jobs and guarantee our prosperity."

Learn more about project "school piggy bank" in BDIU's magazine "Die Inkassowirtchaft" – available for download in German (click picture above).