Why schools need a lesson in money management
Premium- Knowledge of financial skills will go a long way in ensuring a prosperous, debt-free life
Our education system definitely needs an urgent overhaul. Not just in terms of the content of the subjects being taught in schools and colleges, but also in terms of the other important life skills our children need to learn but has been much neglected.
A question that really bothers me as a parent and someone who has been in the field of financial literacy for the past eight years is why we aren’t being taught money management skills. While we are teaching children to study well to secure a good future, we need immediate intervention to teach a few basic life skills like financial skills. Unlike earlier times we interact with money at a fairly young age (think online shopping, stepping out with friends, etc)
This Teachers’ Day, let’s look at this aspect that is much ignored because it has neither become a part of the dinner table conversations nor a part of the formal education system. We see people all around us (and as per various studies) a huge amount of financial stress due to bad financial planning. In today’s world of incessant noise through social and electronic media, incentive driven finance industry and a whole lot of “market gurus" and finfluencers who do paid promos in the guise of educational information, we can clearly see where the problem lies. While some financial institutions conduct some of these investor education sessions, it is usually incomplete and unstructured.
So what are the serious issues people are facing today?
—No formal education on how to plan ones financial journey.
—Taking on loans due to a lack of proper goal-based planning.
—Not accounting for high inflation while making these plans and hence falling short (e.g. while planning for a goal of children’s education that is typically about 18 years away, people tend to not account for an education inflation in double digits. Education is a goal that cannot be put off and hence people take huge student loans.)
—The FOMO (fear of missing out) created by the real estate industry and lending institutions about the importance of owning a house is leading to huge amounts of interest payments over a long periods, distracting people from making the right kind of investments.
—Lack of or inadequate insurance.
—Lack of diversification of assets. Hence, most of the household income goes into real estate, gold and fixed deposits. There seems to be a fear of financial assets and hence “safer havens" are the first option.
—Overuse of credit cards and late payments.
—Bad or no retirement planning. Today a 60 year old is looking at another possible 30, or even 40 more years of nil income amid growing healthcare needs.
—Many women neglect family finances as they believe it is a male domain or because they think it is tough to understand.
—Many youngsters are encouraged to take a home loan as soon as they start earning or look at trying to save taxes as soon as the first pay cheque hits their account.
—Lifestyle expenses have shot up not just in urban India but even in rural India as aspirations and first gen graduates and employees have opened out a whole new world.
This Teachers’ Day, let’s teach our youth an important life skill —money management skills— and ensure in the process we convey its not just a good job you land or the amount you earn that will determine your future prosperity. A sound knowledge of some basic financial skills will go a long way in ensuring a more prosperous, debt free life
What we hear as a constant refrain as kids is what stays with us well into adulthood. So, this Teachers’ Day, lets sincerely relook at the problems our children are bound to face and how soon India’s demographic dividend can turn into a demographic disaster if we do not tackle this issue of teaching an important life skill to each and every student.
Preetha Wali is a co-founder of Pay It Forward.
Catch all the Business News, Market News, Breaking News Events and Latest News Updates on Live Mint. Download The Mint News App to get Daily Market Updates.
More Less