Financial Literacy in Costa Rica to Reduce Poverty
Costa Rica is a country in Central America with a population of roughly 5 million. Although Costa Rica is the Central American country with the lowest poverty rate, that does not mean there is no cause for concern. The poverty rate in Costa Rica was 21% as of April 2020 and is only anticipated to worsen in the coming year due to the devastating economic impacts of COVID-19. Because of the global economic slowdown, inequality in Costa Rica can exacerbate as industries contract and unemployment rises.
Financial Literacy and Poverty
In the face of this global economic catastrophe, it is vital to educate the population on financial matters to prevent higher poverty rates. Personal financial literacy is an effective and fundamental tool used to lower national poverty rates. It also helps individuals better manage their finances and business dealings to maximize fiscal stability and growth.
Financial literacy programs have also assisted women in rising out of poverty. Women have a systemic relegation to domestic duties and patriarchal repression in many developing nations. As a result, they are a demographic that have historically been the most vulnerable to global poverty. Financial literacy programs teach women how to manage their own money in order to manage their own businesses. Women can also become more financially independent as opposed to being indebted to others in their family or industry.
Costa Rica’s Position
Costa Rica and Latin America as a region is considered one of the most unequal regions in the world according to the United Nations. One of the most effective strategies to reduce wealth inequality is by implementing education strategies that inhibit intergenerational wealth retention within families. Keeping money in the family and investing in future generations helps children escape the cycle of poverty. It also decreases their likelihood of experiencing marginalization and oppression in society, particularly among women. These tactics justify the use of financial education and programs about financial literacy in Costa Rica.
One prominent organization focusing on education regarding financial literacy in Costa Rica is Coopenae. It began as a cooperative of educators in 1966 to give aid to schools and teachers. Now, Coopenae has grown into one of the country’s leading financial institutions to focus on service and education.
Individuals in Costa Rica have had very little education in financial instruments such as mutual funds, pensions and various other commonplace financial strategies. The ability of Costa Ricans to make better financial decisions is a simple matter of informing individuals about how they can access these instruments. Costa Ricans can then begin on the path out of poverty towards financial independence and prosperity. Coopenae plans to assist upwards of 12,000 people within the next two years. It aims at people from primarily low-income and disadvantaged communities.
Overall, financial literacy and education programs are extremely effective at reducing poverty rates. They are also effective at giving citizens the ability to properly manage their finances. They also open up the opportunity to start businesses or save for retirement. Therefore, financial literacy in Costa Rica is a smart and effective strategy to diminish poverty and foster a culture of financial responsibility and security.
– Ian Hawthorne
Photo: Enchanting Costa Rica