A renowned strategist, Mac Duke, defines financial education as “more valuable than money.” One thing that people don’t learn early enough is how to deal with money. Financial literacy helps the students in building strong money habits in the early stage of life and avoids many mistakes that lead to lifelong money struggles. While schools teach numerous subjects that help us develop into well-rounded individuals, it leaves out one of the most crucial subjects of financial literacy.
Just like reading and writing, financial management is a skill. No one is born with the innate ability to manage money, but teaching this subject in school can equip children with skills they otherwise may not learn at home. Financial discipline is the key to financial success. Money management lessons are important to build wealth and deal with major life goals. But unfortunately, our current education system has failed to impart financial discipline to children.
A study shows that 53 per cent of adults are financially anxious. The National Bureau of Economic Research states that 40.2 per cent of adults with low levels of financial literacy relied on parents, friends, and acquaintances as their most important source of financial knowledge.
Teaching financial skills to kids before they enter college or the workforce helps them grow into adults who can achieve financial security and success. If children learn the simple principle that “saving for the future is wise”, they begin to develop stronger critical- thinking skills related to money and finance.
In the words of Vince Shorb, the CEO of the National Financial Educators Council, United States, “College graduates spend 16 years gaining skills that will help them command a higher salary, yet little or no time is spent helping them save, invest and grow their money.”
Begin at Home
The money basics should begin at home, which is why it’s always advised that parents should involve children in money matters and teach them small finance lessons at home first. Setting family budgets and involving kids in them will help them learn their money budgeting lessons. Exposing them to a real-life situation will help a lot which can encourage them to achieve short-term and long-term money goals.
Parents can encourage their kids to put money in four pockets: one for education savings, second for games and fun, third for the holiday season, and fourth for future savings which will help them in planning their expenses. These days, kids are quick learners and tech-savvy, so it’s easy for you to teach them financial discipline. Teaching kids about digital money can also help them in making informed financial decisions.
Importance of teaching financial literacy in schools
It’s important to take an active hand in preparing kids for the financial world. Adding subjects like financial literacy to the curriculum may add value to the lives of Gen S kids. Like other subjects such as science or history, financial literacy can be taught to students in schools and major emphasis should be on giving practical exposure to the students so that they can use their money management skills.
Giving training to teachers in personal finance and offering them incentives for teaching it in their classes can give a boost to the entire process. Financial independence means you know the skills to spend, save and invest in the way you want to. In Western countries, children are encouraged to save money and deposit it in banks.
Financial education helps you in different stages of life. During childhood, it helps you to understand the value of money and the importance of saving. The best age to develop saving habits in kids is from 7-10 years. At a young age, this education helps in achieving financial goals and finally, when you are an adult, it allows you to make good investment decisions in the financial environment.
Financial literacy can help the students become independent and empower them with basic knowledge of investment options, budgeting, credit, savings, taxes, financial markets, etc. Teaching financial literacy at the school level may make them future-ready, prepare them for emergencies, and stay on track with their long-term financial planning. The small amounts saved daily become huge investments in the future and the ability to manage money means that the individual is better prepared for life and can make better investment decisions for a great future.
— Written by Ankit Gera, Co-Founder, Junio