Raaghavi Senthil
Money in today’s world is all around us. It controls our lives, whether we choose (or need) to participate or not. Educating people on smart money choices, managing their current funds appropriately, and starting early to prepare for the future are all essential skills in today’s world; unfortunately, school systems around the world do not seem to fully incorporate these monetary concepts into their curriculum!
This leaves students without the skills needed to make informed life decisions as they enter adulthood. The need for financial literacy education has never been more crucial.
Incomes have stagnated and the cost of living has skyrocketed over the past decade, but studies reveal that most members of the adult populace have no idea how to address their financial issues or how they can impact their future prospects.
The problem with financial education in the school curriculums
Financial literacy is defined as knowing how to make good decisions about money-related matters in one’s life, including knowing about interest rates, credit cards, different types of insurance, financial risk management strategies and other aspects of personal finance.
Financial literacy skills are essential because they help people manage their money wisely. The lack of financial education in schools curriculums is a problem with the number of young adults that are unable to develop good money management practices, due to a lack of knowledge or curiosity.
Economic disadvantage also accompanies this lack of knowledge, leading some families to live more frugally by necessity.
While some may not be interested in starting on this path early on, they are less likely to end up with money troubles later on if financial education is made a mandatory part of school education.
The current state of financial literacy
A study reveals that more than two-thirds of the worlds population can’t manage their budgets due to a lack of familiarity with basic financial concepts. It has been found that even people from developed countries such as America would only be able to cover a $400 expense without going into debt.
An even fewer number of people know that stocks on average return more than bonds. Consequently, many people will not voluntarily invest on their own because they dont understand how it works and they believe investments are too risky.
Despite these shocking statistics, the importance of financial literacy continues to be ignored by governments and policymakers worldwide. There are some countries like the USA that currently require schools to teach any kind of personal finance curriculum. Yet, many schools still do not make this course mandatory for graduation.
The lack of practical application in money management
In the past few decades, the average price of a college education has been skyrocketing. In 2017, the cost of a four-year degree reached a record high of $35,000 per year at private colleges and universities. With such a high price tag, its no wonder that students are starting to think about their financial futures sooner rather than later.
There is one big problem though: most college graduates dont have any idea how to manage their debt or their finances. One study from 2016 found that only 38% of college graduates had any kind of formal financial education before they graduated from school.
While 68% have taken personal finance courses after finishing school. This leaves 32% of Americas college graduates with no financial guidance whatsoever. This means that by the time that students want to manage their money, they are already neck-deep in debt and have virtually no prior practical experience on how to manage their money.
Making financial literacy a reality
As children, we are often taught very basic concepts about money: “we spend money to buy things that we want.” This formula for spending money to make more money (or buying things we want) can still apply to all age groups. However, advocates for financial literacy suggest that financial illiteracy can begin as early as primary school.
Education that covers finances in-depth and in real-life situations, rather than spoon-feeding the concepts and selling to young children the knowledge that they may already possess. In addition to pushing for the inclusion of financial management in school curriculums, parents can foster it practically by encouraging their childs participation in the households finances.
When we empower our children to become financial decision-makers, they can take ownership of their finances and can make the right choices for their future. It takes a village, and we have the tools to build that village; it’s up to us to do so.
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Raaghavi is a content creator who loves to experiment with different genres and across verticals. Her love for books and longing for new experiences have together led to lifelong enchantment with words and their ways.