Importance of financial literacy earlier in high school

Want to know how finance plays a vital role in an individual's life? Should education on financial decision making be needed to save, spend, and invest money? Is Financial literacy essential for young children who are in high school? Should financial study be taught as a core subject? This article focuses on the necessity of financial literacy earlier in high school and effective ways of teaching the same.

Did anyone of you question yourself while studying in high school with a difficult/boring class, "Shall I actually make utilize of learning this in my life after going out of school"? You might be taught math formulas, or you might have had to dissect cockroaches, in real life, you don't do. But I am sure you need to have knowledge of handling money carefully in your daily life. As a proactive approach, financial literacy is important for young people. If they are taught about the best financial practices early in middle school, making it one of the main subjects this would help them to deal with money issues properly in the real life.

What does financial literacy mean?

Efficient knowledge of finance management is described as financial literacy. The basics include planning a budget within the earnings, how to save and invest in a diversified manner, managing credits and debits, spending money wisely, etc. Proper education in money management has been essential in making the person financially stable and self-sufficient.

Importance of financial literacy earlier in high school

In our day-to-day life, finance has an incredible role in having a dignified living. Financial freedom enables us to have a good lifestyle, achieve goals, and dreams, and nothing is possible without money. Dealing with financial matters is a big chore and learning how to manage finance is as crucial as earning money decently. Mostly, parents do handle the financial needs of the children and the children have not been empowered to tackle money matters just because they are kids. But when they enter high school after completing primary session they have transitioned from the stage of kids to an adult. This is the ideal age to make them learn and take decisions independently. In terms of personal finance management, if they have been taught basic financial skills, they put into practice what they learn at school. They would be independent while making decisions on how to save, spend, and invest money in their future. The younger they are the more they reap the best returns.

In high schools, students have not been taught extensively and the curriculum is limited leaving out the economical aspect of an individual or a nation from a financial perspective. Nor do parents bother to teach them money management efficiently. It is necessary to add financial literacy as a curriculum in the middle school itself to be transformed into good financial planners, educated buyers, constructive employees, or dynamic businessmen. Teaching personal fund management in middle school alongside other subjects such as math, language, or science, is a precursor that will enable them to become efficient fiscal planners throughout their lives. Other than adding this as one of the core subjects, schools can organize field visits to the banks often and let them learn how they are functional. Moreover, innovative finance expos, conferences, and webinars may be streamlined for high school goers. These trading and investing conferences will certainly showcase the latest technology, long-term investing to boost wealth, and knowledge of fundamentals in the financial markets.

Effective ways of teaching young pupils about financial literacy

Gen Z children have been intelligent and quick learners and they realize well what their needs are and what their lifestyle would be unlikely we all did in the past. Apart from the school education on finance, it is important to educate them not only on basic concepts but also skills of sound financial management. From the parent's perspective, it is their responsibility to lay down a strong groundwork for personal finance learning.

Starting with three jar money system

A simple, but one of the effective ways of teaching the core finance has been the three jar money system, which is the foundation for raising kids financially responsible and self-sustained in the future. Through this method, children have been provided with three jars designated for saving, spending, and investment kept the label on each jar. The saving jar is exclusively for saving purposes just to set a goal to buy a toy, a game, or anything on their wish list. The primary goal is to make them aware of the importance of saving as a habit. The spending jar is for what they want to purchase for the time being. An investment jar is a good option for older children through which they learn how to invest under the guidance of their parents. In addition to the above three, a giving jar or donation jar can also be chosen thus inducing the joy of giving, the virtue of generosity towards others. This can also be utilized for birthday/ thank-you gifts for friends or teachers.

Getting involved in the family financial budget

Involving young teens in the financial budget of the family by the parents is the opening move for money management. The children should be aware of how the parents manage their budgets and household expenses every month. Instead of revealing the true information, which the teens sometimes do not understand, they can present examples and make them understand well.

Providing monthly pocket money

Let the youngsters have some money in their wallets as a kind of monthly allowance or pocket money to start their financial journey. This pocket money will be given as an incentive for doing small household chores, achieving certain grades in school, or participating in any sports activity. They need to have a thought that this has been their personal finance to make a budget for how much to spend and how much to save discreetly. They can also be given rewards and gifts in the form of money during festivals, and to let them have the zeal of financial freedom.

Setting their (teens) own budget, goals, and savings

Understanding the difference between needs and wants is a priority for fiscal management. Let them distinguish between what the necessities are and what the wants are. If they like to buy a costly toy. They should be taught to save to buy that toy or something else from their own pocket money setting as a goal, and indirectly to save. Parents being the role model, children indeed tend to learn from parents' etiquette.

Discussing and reviewing spending/savings

Maintaining a diary of what they spend and what the balance remains after spending must be discussed and reviewed at the end of the week. Through this traditional way of bookkeeping, they learn how to cut down on unnecessary expenses, and be inspired to save out of this accounting process. Parents do discuss and explain the unknown facts and calculations if required. Consistent reviewing helps them to have an analysis of accounting and makes them financially literate in the future as well.

Introducing sensible shopping at grocery stores and malls

One might think that shopping is just like a merry-go-round or a spending spree, yet it benefits the youth to be aware of the products in the market and get updated on the real outside world. Shopping sensibly is always healthy in the sense that it initiates a better perception of the market from which we need to buy our essentials as well as sometimes wants or something more than that. Young minds always do tend to behave on whims and wishes while going shopping/window shopping. Decision-making is pivotal in purchasing other than the necessities and parents need to guide them keeping in mind the deciding factors such as price, size, weight, and discounts while buying the products. Making a list and comparison of prices and brands between the shops is to be addressed before purchasing.

Keeping a minor savings account in banks

A fun way of teaching about finance to children is to keep a minor savings account in a bank and this indeed would induce a habit of savings at an early age. Many banks provide zero-to-minimum balances to make their money multiply over time. They understand the concept of banking by the financial institutions and how they pay back as interest for the money they saved. This would help their wards to gain knowledge in banking transactions like how to deposit and withdraw money and the interests are calculated. Thus, they understand the fact that money being deficient should be spent sparsely.

To sum up, inculcating financial literacy skills at an early age pays off in the future and to the whole economy of a country. It is the best quote, "A person either disciplines his finances or his finances discipline him." Indeed, a person is to take control of his finances but never finances to take control of him. Let us set up a disciplinary financial curriculum for the youth for their success throughout their life.


Author: Umesh15 Mar 2023 Member Level: Diamond   Points : 5

I strongly agree that financial literacy is a must and it should be inculcated in the students in their early age.
Academic learning of subjects like Mathematics, Economics and Computer Science is alright but using them for practical aspects in our lives in investment and financial management is the area that is of crucial importance and has to be addressed in the school or college syllabus.

I remember one of my neighbors, about 25 years back (when bank and company FD interest rates were quite high), telling me that a company was giving 9% interest on the investment made for a short period of 6 months. He looked excited about it and told me that he had already invested some 40000 rupees in that. He also confided in me that he will be getting an interest of Rs 3600 and felt good about it. As I was also making some investment at that time as I was having a good job I raised my doubts about the calculation of interest that he had made. When I told him that interests are generally on per annum basis and this 9% will be for 1 year and as the money was kept only for 6 months so the interest calculation will be only for 6 months. On hearing that he became a bit jittery and finally agreed with my view and then calculated interest which came to be Rs 1800 only. So, the moral of the story is that we must be aware about some general things when we are investing money anywhere. There will be some hidden lines which we could not be understanding at that time.
If students are told these things during their student lives then definitely they will not do any error in making a good financial investment decision.

Author: DR.N.V. Srinivasa Rao15 Mar 2023 Member Level: Diamond   Points : 3

Financial literacy is an important issue and the importance of money should be taught to children so that they will understand the subject well. Some banks introduce a kiddy bank system. They open an account in their bank in the name of the kid and they will give a small container. That will be used by the kid to save coins and there will be a secret code. The purpose of this is to teach the importance of saving money to the kid.

Parents in the house should also make children understand the income and expenditure. A high school student should know the financial background of his family and how to manage his expenses based on the pocket money he receives from his/ her parents. If we explain to the students about income and expenses and how to control our expenses when there is a limitation of income. This lesson will be useful for the person through out his/her life.

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