There is no doubting the fact that everything revolves around money these days. Like it or not we live in a “material world” one where money issues crop up everywhere right from acquiring the latest gadgets to seeking out education. Our whole life right from birth to death is scrolled out on a background of finance so to say. Not acknowledging that is closing our eyes to a crucial aspect of reality.
Yet there are people who blindly carry themselves onwards in life without realizing that knowledge about finances and personal finance planning is as essential to us, or even perhaps more than education in the other fields of life. In some families it is not okay to talk about money as it is considered crass and in bad taste. In some, the very idea to discuss and plan finances is missing. That is like taking to the road of life without a road map. No wonder then that there are so many people lost in a morass of debts and financial muddles.
Not teaching kids about money management is risking losses to the tune of crores of rupees in ones lifetime. Considering that more children are using credit cards these days, and more are taking out student loans it stands to reason that they need to know about credit cards, loan management strategies and savings. We wrongly assume that this knowledge and expertise will come to them automatically as they go along. They will learn no doubt just as we did with time and experience but in the process they could stand to lose a small fortune by not handling their money properly. Not only that the country also loses in the process.
So it makes sense to teach them basic financial planning which in the long run would save them money as well as time. The earlier we start the better.
Though basic money education can be started at home by giving the child an allowance and sending him on small buying chores schools can also include financial education beginning in the very smallest classes right up-to school leaving groups.
Why isn’t financial education being given in schools? Perhaps it has never occurred to them to do so. Many schools say they don’t have the means or the funds for that. Teachers feel uncomfortable teaching personal finance and many feel it’s just not required.
However, many countries seem to have wakened up to the need in that area and have developed finance programs targeted directly at kids in school. England has already mandated finance and money management classes in schools since the last two years. In the Netherlands, the government invites experts from financial providers to schools to speak about personal finance. Now the US too is opening up to the idea of educating its teens on finances after taking note that student debt has ballooned to more than $1 trillion, and more than one-fourth of the 42 million Americans who have borrowed money to pay for higher education are either behind on their monthly payments or in default. They are realizing that people need to rely on financial knowledge for all major life decisions, whether it’s applying for a mortgage or taking out auto insurance, and if they are lacking in financial savvy everyone stands to lose.
While sexual education is mainstream in K-12 schools, in the US, financial education is not. The result is that the U.S. ranks 14th behind Israel, Canada, Australia, Singapore and much of Europe in financial literacy. That’s according to a huge survey of over 150,000 people in 148 countries conducted by Standard & Poor’s and Gallup in 2014.
There are are some signs that this might soon change in the U.S. The PwC report notes that millennial teachers may be changing the way schools incorporate financial curriculum: 62 percent believe financial education should start in elementary school, while 47 believe it should start in the classroom and be supported at home. That’s a start.
In India too we cannot hope to achieve our dreams without understanding how to save, invest and use debt wisely. Today we mostly get our money tips from vague sources, a friend or relative, instead of from a wise and trusted source, financial education. Education, well planned financial education could make an amazing difference in the quality of the lives of our children at least, that is if we start soon enough.
Choosing health care and insurance plans, taking a loan wisely, choosing a retirement plan, learning that using a credit card comes with the responsibility of making timely payments, that spending wisely involves spending only within our means, of calculating routine and essential expenses, of making a budget, of saving for a holiday or long term, of investing in a home..all comes within the scope of that financial education.
To quote CNN, “Financial education alone won’t fix all of the problems… But consider that since schools invested in sex education in the 1980s and 1990s, teen pregnancies have declined dramatically. Imagine what could happen if people learned the basics about money.” It is gratifying to imagine how debts would decline and more people would find themselves in a state of good financial health.
New resources – which may include exercises, worksheets, videos and online content – and well trained teachers with a well thought out curriculum could go a long way in imparting financial literacy to our youngsters.
Children need basic financial education concepts no matter which strata of society they belong to. They need to know about credit cards, loan management, savings, investments, insurance, pension and retirement plans. And they need to know it now!
When students are taught well they improve in financial capability knowledge and behaviors, exhibiting “high financial literacy” on par with people who are old enough to be their parents. Maybe we too could learn a thing or two from them then, who knows?