Money makes the world go round. Regardless of whether you want to live off the grid, spend time indulging yourself, or climb the corporate ladder, you can’t do either of these things without enough money. Still, how does one make money? How do they pay taxes for the money they already have? What do they do when they’re short on cash?
Most importantly, what do they do with the money they already have? This is what goes under the umbrella of financial literacy. Here’s why this should be taught as early as school (and how this should be done).
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Contents
Teaching relevant topics
One of the biggest complaints when it comes to the modern education system is the fact that they force you to learn all six wives of Henry VIII, but there’s no mention of teaching you how to file your tax report.
By putting more emphasis on teaching financial literacy, you’ll finally turn this thing around. Not only that, you’ll break the stereotype of not covering relevant lifestyle topics.
Another massive advantage is that you won’t have trouble inspiring intrinsic motivation in your learners. Schoolchildren aren’t too young to understand the importance of money in their lives, especially since you can make it relatable as an example. Use pop culture icons as examples or even their parents. You could even explain some basic concepts of their P2P interactions and allowance.
This works on every level of education, but it’s usually best for younger adults, not someone just about to get their bachelor’s degree (although one is never too old to learn).
Remember that explaining why a topic is relevant in their particular case is the first big challenge of any teacher, not just one who teaches financial literacy to young children.
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Financial challenges faced by young people
One of the things that these financial education services could especially focus on is the challenges that young people face. The general lack of financial literacy sounds bad, but to understand what makes it so terrifying, you must break it down into specific challenges. For instance:
- Handling student debt: As soon as they wrap up their education, most students face student debt, which is a significant expense that could take decades to repay. Understanding how to manage this debt and repay it as soon as possible is crucial to one’s quality of life in the long run.
- Living income: Youngest adults usually work entry-level jobs, which means that they still don’t have an income that could cover their living expenses. Learning how to calculate and achieve this living income is one of the most important lessons that should be included in the curriculum.
- Lack of emergency savings: Young adults don’t have an emergency fund. This means that, in the moment of despair, they focus on bad financial solutions like payday loans, using their credit card, or selling their belonging (although the latter is the best option).
With the right curriculum, you can easily teach young adults how to act in these scenarios, giving them a significant boost in their early adult life. Keep in mind, however, that, to be effective, these skills need to be taught before they actually become financially independent. This is why introducing this curriculum into schools is such an amazing idea.
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Core financial concepts and skills
You don’t have to turn your students into professional accountants. All you have to do is teach them things like:
- Budgeting: You can never outearn bad spending habits. This is why you see artists and athletes who make millions and end up broke in a matter of years. The reason why we singled out these two groups is because entrepreneurs can’t get to the top without grasping at least basic concepts of budget management. By teaching kids how to manage their income and their expenses, you’ll do them a huge favor.
- Saving: Another thing you need to teach the kids is the importance of saving. Having an emergency fund, a rainy day fund, and retiring early is pivotal to the direction their life takes. Moreover, you need to teach them to save for all the big moments in their lives and all their major life decisions. Getting married and buying a new house are not just lifestyle decisions; they’re also financial ones.
- Debt and interest: Interest is this big boogeyman of the financial world, and there are a lot of people who just embrace this idea without thinking twice about it. If you were to rent someone else’s car, you would pay for the chance to use their vehicle. The same thing goes for using someone else’s money. The longer you have the car, the longer you pay – the longer you have the interest, the more you pay. The more luxurious the car, the more you pay – the bigger the loan, the more you pay back.
By teaching people how to handle these few core financial tasks, you’re already transforming their lives for the better, far more effectively than with most other subjects. Remember, these are the skills most of them will use daily.
Challenges in teaching financial literacy
As far as the challenges go, there are two that take the helm:
- The knowledge and training of the teachers: one of the biggest stigmas in education is those who can do and those who can’t teach. Nothing could be further from the truth. It doesn’t take the best player to be the best coach, and it doesn’t take a multi-millionaire to teach financial literacy.
- Age-appropriate curriculum: Some financial terms are incredibly difficult to understand, and learning how to adapt them to the age of young learners can be challenging. Moreover, not all financial aspects are relevant to these young learners, and making a triage of what to include and what to leave out can sometimes be quite difficult.
Ultimately, no topic is without challenges; you just have to learn how to approach the subject matter correctly.
Wrap up
The right time to learn a skill is just before you need it. Speaking of which, for most people, school years are this window of opportunity. With teachers who know how to frame things right and the right and a good curriculum, this idea can give some extraordinary results – it can even change lives.
