In school, she was everything we want our students to be—a topper, diligent, well-mannered, and responsible. She excelled at all the markers of a "good student." But as she entered adulthood, she faced a stark reality: while her academic achievements were unquestionable, she felt unprepared and even handicapped when it came to managing finances, understanding taxes, and navigating the complexities of money management. Years of struggle later, she finally gained control over her finances, but one question lingered—why didn’t school prepare her for this?
This isn't an isolated story. Studies show that over 69% of young adults struggle with financial literacy and encounter difficulties in budgeting, understanding taxes, and even in dealing with essential financial concepts like loans, insurance, and investments. The gap in financial literacy among young adults raises a serious question: Are schools failing our children in preparing them for financial realities?”
Why Early Exposure to Financial Literacy Matters
Experts argue that children should be introduced to money concepts early—as early as grade 7 or even younger. Financial literacy, when taught progressively from a young age, leads to better decision-making, budgeting, and an understanding of the economy. Imagine if schools normalised topics like:
Budgeting and Saving: Building the Foundation
Teaching children to budget and save early, builds the groundwork for financial discipline. Here’s how schools can integrate this:
Budgeting Basics: Introduce the concept of distinguishing between needs and wants. For instance, through classroom activities, students can plan a small event with a limited budget, ensuring they allocate funds wisely.
Savings Habits: Encourage students to save a portion of their pocket money or earnings from small entrepreneurial projects. Highlight the concept of paying yourself first by saving before spending.
Emergency Funds: Explain why setting aside money for unforeseen circumstances is crucial. Teach them the 50/30/20 rule: 50% for needs, 30% for wants, and 20% for savings.
Real-World Tools: Introduce simple apps or spreadsheets to track expenses, giving them hands-on experience in managing money.
Basic Economics: Understanding the Bigger Picture
Economics isn’t just for college students—it can be simplified for middle and high schoolers to help them grasp how the world works:
Supply and Demand: Use relatable examples like the pricing of movie tickets or holiday sales to explain why prices fluctuate.
Inflation and Purchasing Power: Show how the value of money changes over time through simple activities like comparing the cost of a candy bar 10 years ago to today.
Economic Systems: Introduce concepts like capitalism, socialism, and mixed economies to help students understand different financial structures.
Global Perspective: Discuss how events like the COVID-19 pandemic or geopolitical tensions impact economies worldwide.
Tax Basics: Demystifying Taxes
Taxes are one of life’s certainties, yet most students graduate with no clue about how they work. Here’s what schools should teach:
Why Taxes Matter: Explain the role taxes play in funding public services like schools, hospitals, and infrastructure.
Types of Taxes: Simplify income tax, sales tax, and property tax, showing how they are calculated and applied.
Filing Returns: Provide mock tax filing exercises using real-life examples (simplified for their level) to teach students the process and importance of filing taxes correctly.
Tax Planning: Introduce concepts like tax-saving instruments (e.g., insurance, mutual funds) and deductions.
Financial Instruments: Expanding Horizons
Understanding financial instruments equips students with knowledge to grow their wealth responsibly. Schools can introduce:
Savings Accounts: Explain interest and how compounding works through activities like calculating returns over time.
Investment Basics: Cover the differences between stocks, bonds, and mutual funds. Use simulations or games to let students "invest" fake money and track its growth or loss.
Risk and Returns: Teach the relationship between risk and reward, emphasising diversification to mitigate risks.
Long-term Planning: Discuss retirement planning, even in simple terms, to instil a habit of forward thinking.
Practical Money Skills: Real-Life Applications
Beyond theory, practical money skills are essential for real-world financial management. Schools can focus on:
Digital Payments: Teach students how to use digital wallets, UPI apps, and manage online transactions safely.
Debt Management: Explain credit cards, loans, and interest rates, stressing the importance of avoiding unnecessary debt.
Negotiation Skills: Role-play scenarios like bargaining for better prices or negotiating salaries, fostering confidence in financial discussions.
Understanding Contracts: Introduce the basics of reading and understanding financial agreements to avoid being misled.
Insurance Basics: Explain the purpose of health, life, and property insurance with examples that make sense to their age group.
Data tells us that less than 2% of all urban schools mandate personal finance classes for high schoolers, and even fewer address these skills in middle school. But shouldn’t it be a priority for schools worldwide? Isn’t it equally important as traditional subjects that dominate the school curriculum?
The Role of Schools in Financial Education
Recognizing this gap, we started an entrepreneurship program from grade 7 in our schools, specifically designed to expose students to real-life financial management. From budgeting for projects to understanding investments, students are encouraged to engage with money early on. The feedback has been overwhelmingly positive—not only are students learning to budget and plan, but they’re also gaining confidence in understanding financial instruments and economic concepts. This hands-on exposure aims to foster a generation that is financially informed and empowered.
Questions for Educators and Policymakers
Are we adequately preparing students for financial independence?
At what age should formal financial education start, and what should be its structure?
How can we bridge this critical gap in education without compromising on other core subjects?
As educators and influencers, we have a collective responsibility to rethink how and when we teach financial skills. Are we doing enough to empower our children to handle financial challenges confidently?
If schools can instill values and work ethics early, why not financial literacy too? It’s time we re-evaluate our curriculum priorities and offer programs that genuinely prepare students for the financial world they’ll soon step into.
Let’s make financial literacy as fundamental as math or science and give our students the tools they need to succeed in life, not just exams.
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