Financial literacy is a significant aspect contributing to the development of the economy. With increased financial literacy, citizens manage money better, which helps in reducing the country’s poverty. In India, the current financial literacy rate is as low as 27%, which means less than one-third of the Indian population has the knowledge to manage their finances.
Such low rates of financial literacy can be detrimental in the long run. One of the ways to handle this is to include financial literacy in schools to impart the knowledge of personal finance early on in life.
Today’s article explores in depth, the different factors involved in including financial education in schools.
Importance of teaching finance in educational institutions
Financial literacy is the ability to comprehend financial concepts like budgeting, investing, retirement planning, taxes, etc., and implement them in personal finance to achieve financial freedom. India’s low literacy rate suggests a lack of financial education among citizens, including youth, adults and children.
Educating citizens from a young age can help develop the habit of financial management from the beginning. As part of that, teaching kids about money in schools can have a noteworthy impact on their mindsets.
- The younger you are, the easier it is to learn new skills. It is scientifically observed that children grasp faster since they have fewer biases. So, including financial lessons in schools help children learn and develop the habit of saving and rational spending.
- Personal finance has a lot to do with achieving financial freedom. Financial education curriculums benefit children by giving them the required knowledge to make correct financial decisions to achieve freedom sooner.
- Learning financial concepts early on motivates children to perform well in their careers and develop entrepreneurial skills. This is essential for the country as today’s youth is tomorrow’s future.
- Financial education is the first step to understanding the country’s economics. It helps children understand how their choices impact the country, which promotes responsible and rational decisions.
Why is financial education not a part of the academic curriculum in schools?
The current curriculum in schools and colleges includes the basics of economics, but the details are taught only to students who choose a particular specialisation. This structure is not very ideal, as financial education is essential for everyone and should not be optional.
However, some challenges to including financial education as part of the syllabus in schools are:
- Most people do not recognise personal finance as a subject that requires coaching. Since this has not been in practice, it is usually believed as a skill that curious people pick up later in their lives.
- School management and boards may be resistant to change. Including financial skills in education requires a new curriculum altogether, which some schools may not be open to adapting.
- Another major drawback regarding financial education is the lack of resources to teach students. Given the new concepts of finance coming up every other day, it is quite impossible to update textbooks and study materials with the latest information.
- Teachers in schools lack the required knowledge and skill to teach personal finance concepts, which is again a significant obstacle in including school-based financial literacy initiatives.
Ways of integrating money management in schools
Despite the various challenges, some simple ways for schools to add financial education to their systems are:
- Tying up with finance professionals to conduct special classes on finance once every few weeks.
- To approach companies to include school financial literacy programs as part of their CSR (Corporate Social Responsibility) activities.
- Include basic concepts of finance while teaching subjects like mathematics and economics.
- Include personal finance as an elective for interested students.
Financial literacy for young learners at home
Parents play a significant role in children developing their knowledge of finance. Hence, parents need to understand and acknowledge the benefits of financial education for children. Besides school education, parents at home can take simple steps to impart financial knowledge that can have a lasting impact on the minds of children.
Here are some simple things parents can do at home to trigger curiosity in young minds:
- Include them while preparing your monthly budgets. Discussing money in front of children is a taboo in many Indian households. The first step is to change this mindset. Involve children when they are young to expose them to practical problems.
- Include them while preparing shopping lists and while going shopping. Plan your vacations in their presence. Introduce them to the comparison approach before spending money.
- Create a bank account for your children. Deposit a portion of their pocket money in their bank accounts so they understand how banks function.
- As they grow, gift them in stocks instead of games and toys. Introduce them to the stock market while they are young.
- Narrate financial news in the form of stories to teach financial concepts subtly.
Financial literacy for students might seem like a complex change in the education system. But, schools and colleges need to consider the growing need for financial education and its contribution to the country’s growth. With simple coordinated initiatives from schools and parents to empower their kids, teaching finance will be easier than it currently seems.