by Kapil Talwar
Let’s face it, the Indian education system does not have too many admirers. People are not wrong in critiquing it, given its numerous shortcomings. But, the criticisms mostly revolve around the obstinate emphasis that schools place on rote learning. Forget innovations in schools; even people who vilify the education system aren’t innovative enough to go beyond the “so much mugging” complaints. Some outliers would point out that not enough is done to promote sex education. But to my mind, it is the lack of education regarding money-matters that handicaps people the most.
Students will eventually realise that rote learning is not a skill in the real world, students will eventually learn to have sex, and safe one at that, but they may live their whole lives not knowing how money works. This is poetically cruel, given that people primarily get a higher education and work jobs to earn money. Teaching them about their own money is the least society can do.
The extent of ignorance is appalling
It is particularly appalling to see educated urban folks, doing well in their respective lines of work, struggling with money, taxes, and ‘commerce stuff’. I think the perception that money matters are for commerce-folks alone needs to be shed. Ignorance even exists across age groups. Children understand spending but not saving. College kids understand credit cards but not the compounding of interest that robs them, one statement at a time. Adults blindly trust their chartered accountants with their tax matters and financial advisors with their investments. Senior citizens keep pumping money into equity schemes like there is no tomorrow, not knowing that their distributor makes more money selling equity schemes than debt schemes.
Stories of well-meaning, well-endowed people blundering with money
My own father, a senior doctor and pioneer in his branch of medicine, has struggled with money matters all his life. He can spot an aneurism or tumor by going through your brain scans, but cannot tell the difference between an equity and preference share, a bank account and a demat account, a mutual fund and a portfolio management scheme (please note that he owns all of these). He does, however, know the difference between a credit and debit card, and for that, I am proud of him.
An even bigger tragedy is that newly salaried people don’t recognise the importance of savings. My own young cousin told me that she exhausts her salary in ‘drinks and Uber rides’. Financial planning is supposed to be a real thing, not two boring words glued together. The rot exists in higher levels of cash flows as well.
I remember reading the story of a Mumbai school peon who won a crore rupees in a Playwin lottery one day; when a newspaper caught up with him two years after the win, they were surprised to see that his financial condition was still as bad as before. Apparently, he had booked two flats in a building that never got constructed, effectively blocking those funds. He also bought a BMW (would you believe it?) which he parked in a far flung locality near Borivali, because the people in his locality would damage his car on purpose. The rest of the money was just spent. Two years later, he was working in the same school and was still strapped for cash. Similarly, just try to count the number of movie stars and star-athletes who have gone broke a few years after their hey-day, and you will fall short of fingers. The adage ‘a fool and his money are soon parted’ comes to mind.
Financial literacy can help alleviate social evils
You may call this wishful thinking, but a decent financial education can cure social evils more than any government policy can. Old parents who financially independent can elect to live with dignity, rather than be at the mercy of their abusive children. A wife who is sufficiently invested and in control of her money is less likely to continue in a toxic marriage. Adults who have provided for tomorrow can take bold decisions in their career and pursue their passions. It is often the lack of money and planning that makes people do what they do not want to. Obviously, life is not as simple and objective as I have just described. Nevertheless, there is merit in the underlying principles of preparation and readiness.
Ideas for the education system to approach financial literacy
In investing and in education, ‘start early’ is the rule of the game. I wish schools would impart financial literacy to high school students, who are at an appropriate age to appreciate these things. Maybe it can even be taught in primary school, given how many in our country are forced to drop out of school early. More importantly, I hope they teach it better than they teach existing subjects; a case in point- I had a friend who would mug up Geometry solutions; funnily he didn’t do too badly in school. Any endeavour to introduce financial education in school would be meaningless if kids would be expected to memorise and barf it out during exams in response to questions like ‘what are investments’ or ‘what is a mortgage’. Instead, if we could maybe introduce it as a fun subject, where kids are introduced to case studies, such as the story of the peon and sports personalities, they might get a better grasp of things. Let’s not even have exams for this subject! Else kids might be sent to tutorials to ‘learn’ these concepts. And till we have a curriculum in place, perhaps we can begin by making ‘Rich Dad, Poor Dad’ by Robert Kiyosaki a required read for all adolescents!
Kapil Talwar is a chartered accountant by profession who hopes to run for public office one day and give India the parliamentarian it deserves.
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