Financial literacy involves teaching students the basics of money management. This includes things such as debt, budgeting, saving, and lending. The purpose of financial literacy courses is to set a foundation for students so that they can build strong money habits later in their lives.
There are a number of ways young people would benefit from being taught basic finance in school. For one, it would lead to increased stability. However, it will also help develop crucial critical thinking abilities.
Protect Their Financial Future
Many young people go into their adult lives unprepared. That is why many adults end up in debt and living paycheck-to-paycheck. They also find that they are unable to buy a home because of their lack of financial education. Additionally, people find that they are unable to save for their financial future because of their lack of financial planning.
Many of the financial problems that people have experienced could have been avoided if people would have been prepared. The best time to learn about financial literacy is before you get out of high school.
Personal Finance is Not Taught at Home
Most parents make sure that they teach their children manners and how to conduct themselves. However, personal finance is something that many parents neglect to teach their children. In fact, a 2017 survey showed that 69 percent of parents stated that they felt more comfortable talking to their children about sex than money.
Only 23 percent of the children surveyed stated that they had a recent conversation with their parents about money. Only 35 percent of parents were comfortable talking to their children about money. One of the reasons that parents do not like talking to their children about money is because this experience wasn’t part of their own adolescence.
Children spend eight hours of their day at school. That is why school is the best place to learn financial literacy if they are not being taught at home.
Learn How to Build Credit
Maintaining a good credit score is important for your financial future. You may not be able to get a loan, credit card or home without a good credit score. It is possible to get financing without a good credit score, but the interest rates will be a lot higher.
Not only could academic courses about financial literacy teach the importance of a good credit score, but how to attain one via lower credit-to-balance ratios, on-time payments, etc.
Prepare for College
One of the most important decisions that a high school student needs to make is whether or not they want to go to college. Most people will need to get financial aid to pay for college. Financial literacy courses can help a person decide whether or not they should go to college, as well as the various financial aid options available to them if they do.
Recent studies found that, of 150 low-income students that were college-oriented, nearly half do not apply for financial aid because they feel they “don’t know anything about [it].”
College enrollment could increase if more young people had a grasp on the ins and outs of applying for financial aid, as well as the various types of student loans available – and how to repay them efficiently.
How to Teach Financial Literacy Courses
Schools should make sure that the financial literacy courses are practical. For example, the students should be taught how to put together a household budget. The courses should also teach people how income and education level can affect budget.
The classes should also be interactive and fun. Students who enjoy the classes will be able to get more out of them. Furthermore, teachers should be comfortable teaching these classes.