We are in constant awe of kids these days being so ‘tech-savvy’ and better than us in using electronic gadgets…then The question which arises is ‘Why can we not teach them the basics of personal financial planning in their formative years’?
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The Gap in Financial Education for Children
Enough has been read and written on the pursuit of Children’s Higher Education (and that too of studying abroad!) as a financial goal … but what has not been read or written substantially thus far is the need to inculcate and introduce the basics of Personal Finance as a subject to our children whilst they are in school itself for them to be strong on their financial fundamentals in their early learning years itself …
The Importance of Early Financial Literacy
Basic tenets of financial planning which form the foundation of an evolved plan going forward need to be introduced at an early stage which will have deep-rooted benefits for this generation.
Simple concepts like Individual cash flow management (monitoring income and controlling expenses), time value of money, power of compounding, meaning and effects of inflation, identifying financial goals, basic concepts of banking, the difference between savings and investments, understanding mutual funds/government small savings schemes can be introduced in the higher secondary curriculum itself. Can we imagine the benefit these topics could have if understood well, in shaping the mindset of a growing child and helping them take prudent financial decisions regarding their career and life when they are ready to do so at appropriate times in their lives?
Benefits of Financial Education in Schools
Including financial planning in the curriculum will not only enable significant changes in the child’s behaviour but will also increase self-efficiency and financial literacy. Learning about the basic and most importantly simple concepts of financial planning will aid the students gain effective knowledge, financial control, and confidence in managing their own money. Their level of understanding these concepts will have an impact on every aspect of their life.
Paradox of Modern Education and Financial Awareness
In today’s competitive times when there is a deluge of information available in the digital space regarding the new-age professions one can pursue in order to be financially strong, it seems quite paradoxical that we do not equip these very children with the knowledge to understand the ethics and core subjects related to preserving and growing MONEY into WEALTH in a proper manner for future prosperity.
Importance of Financial Discipline
When it comes to money, Financial DISCIPLINE is the other important aspect that needs to be inculcated. It requires self-restraint and knowledge to differentiate between splurging, spending on essentials, saving and then investing in the right products. The associated perks and the repercussions that are part of this process must be known and experienced by children in these formative years.
Fostering Independence Through Financial Awareness
Having a mild insight and initial knowledge of their own personal finance can benefit children in making their financial decisions without relying on someone else thereby increasing their ‘independence’ from an early stage of their life.
Understanding and practising these concepts in day-to-day life will help avoid or reduce any financial upheavals they may encounter in their future lives.
Including Children in Financial Planning
Come to think of it, when it comes to the topic of children’s higher education, usually the parents independently plan their children’s higher education and the child himself is not included in this important process which will have a major impact on his own life (apart from the impact it has on the parent’s finances!)
It is important to make children financially aware so that they can be a part of the decision-making and implication process of their own higher education process. Inculcating these fundamentals will make the child more empathetic towards the real situation in deciding the right path ahead. If the child himself is somewhat ‘financially savvy’ and can give his own balanced views regarding undertaking the journey of his higher education after understanding the family’s overall financial situation, just imagine the comfort this would lend to parents in taking the right course of action regarding the child’s future and keeping their own personal financial goals in sync as well.
Lifelong Benefits of Early Financial Education
No matter what profession or career is chosen by the child, the knowledge of personal finance and money management skills taught to him at an early stage in school will remain imprinted in their mind.
To sum it up, today we live in a world where ‘grown-ups’ are facing financial distress just because they yet do not have financial awareness and keep repeating the same elementary mistakes, isn’t it time we change that and lay a foundation for creating a financially literate society starting with our children learning the basics from an elementary stage and early age?
