Gaining financial skills is one of the most important things contributing to a healthy and secure life ahead. The concept of budgeting, saving, expense and investment help us in decision-making in various aspects, and these aspects can be non-financial too. It helps us realize the need of the hour and our wants and desires that we can further categorize as either a requirement, an upgrade or as luxury. Now let’s think about how amazing it would be to have financial management as a subject in school. A topic that you can learn and apply daily at home and everywhere you go.
As per a Qualtrics survey done in the USA in 2019, 30% of the respondents believe it should start in elementary school, 33% think it should begin in middle school, 32% believe that it should start in high school, and only 5% assume that it should start in college.
Let’s talk about the advantages of learning finance as a child.
Budgeting: Being aware of your needs and wants is the first step to budgeting! Being aware of how much to spend on necessities, save for their wishes and then invest the surplus is the next step. This awareness plays a significant role in being actively responsible for making financial and non-financial decisions. It takes into consideration the concept of debt. If a thought of taking a loan occurs in your mind, automatically, an allocation in the budget would be made to pay it off in time or even before time.
Savings: While it is evident that parents will take up the complete responsibility to pay for the education, it would empower a child to start saving for their further education after school. This sense of responsibility encourages students to give their best performance during their studies. This habit of saving gets inculcated in students’ psyche and helps them save for their future.
Intelligent Decision Making: Good financial management and decision making may impact a student’s entire future. Take into consideration choosing the right career — owning a business vs having a job, opening an account in the bank — saving vs current vs OD, acquiring an asset — purchasing vs renting, analyzing the utility of a product/service based on its pricing vs sustainability. These are important decisions that one makes without even thinking but have an everlasting financial impact.
Knowledge: Knowing the difference between a credit card and a debit card, the concept of taxation, how conditions in the economy affect our finances — these concepts will help every student navigate life with ease. Without proper insight, a credit card could be free-flowing money, while the idea of a debit card is just restricted spending. These notions will impact the spending behaviour and growth of the child. When it comes to taxation, it is vital to know what taxes we are paying on daily purchases and even as an individual yearly (For example, Income tax).
Children will be well aware of the financial developments happening in their respective houses and can actively contribute to decision making.
Understanding finance management does not just lead to a secure financial future but also a positive mindset towards money. This thinking shapes student’s character, makes them feel progressively independent and encourages them to give back to society.