Knowing basic personal financial skills such as managing finances and budgeting are some of the most important things a person should have to live a healthy, happy, and financially secure life. After all, the level of understanding of the fundamentals of budgeting, saving, managing debts, and investing can impact all parts of your life and can mean the difference between a life of prosperity or poverty — and students need to learn early on.
That said, here are five compelling reasons to teach financial management to students:
Financial Illiteracy Results In Ill-equipped Adults
Like the well-known CNA training that young and aspiring nurses take to learn how to provide primary care for patients and help them reach their dreams, learning more about financial management helps students become prosperous adults. Statistics show that young individuals without financial management knowledge typically end up as generally irresponsible adults, specifically when it comes to financial matters.
These people usually don’t know how to invest, can’t save enough to buy homes or other “big” purchases, and often have low credit scores. On the other hand, adults taught about financial management while young had no issues and made better informed financial decisions during adulthood. That’s why having an overall robust financial foundation in youth is crucial.
After all, sometimes, people get caught up in urgent scenarios requiring massive amounts of money — and for a young individual who’s financially literate, handling these situations becomes a little more manageable compared to those who have no financial management knowledge. In other words, there are multiple reasons why financial literacy is crucial for the youth, and they should be constantly taught about how to save, invest, budget, and manage finances as they grow up.
They Don’t Know Enough and May Succumb to Temptations
Several research studies have shown that many young individuals nowadays have minimal to no knowledge regarding finance and economics, which can be troublesome when they reach adulthood. They’re spending and borrowing money without knowing that interests can build up and leave them with a debt they can’t afford, remember, credit cards aren’t free money.
Teaching students about managing their finances early on can help them be more knowledgeable, allowing them to make better decisions regarding their purchases. Additionally, knowing more about financial management can help young people resist greater temptations, which is crucial in today’s world of convenient online shopping, where wasting money is a little too easy.
That’s why it’s even more important than ever to teach students the value of saving and delayed gratification.
They May Accumulate Large Debts
Young people who develop terrible money habits due to a lack of financial management knowledge and college students nowadays usually have at least one credit card, leading them to face massive debts. By the time most of these students graduate, half of them typically have debts worth over $3,000. If financial management were taught to students in high school or early on, they could lessen their debt.
Possessing financial literacy can help them find better options to pay for their bills, tuition fees, and other expenses, lessening the burden on their finances in the future.
Early Financial Management Lessons Can Lead to a Healthier Life
Surveys show that over half of young people feel that their minimal knowledge in financial management is holding them back from making any progress in their finances — significantly preventing them from their full potential. Teaching young students about financial literacy can help them enjoy the following benefits:
- Develop Good Saving Habits – Learning about financial management early on can help them save more for their future.
- It Makes Them More Responsible – Financial literacy can help young individuals be more aware and generally responsible about their spending habits.
- It Gives Them a Good Credit Score – Making smart financial decisions can give anyone a decent credit score, which significantly affects one’s life. From getting a job to applying for a credit card, having a good credit score is crucial — and early financial management lessons can help students achieve this.
Students May Pick Up Bad Habits With Lack of Financial Knowledge
When young individuals develop poor money habits like gambling or generally have poor backgrounds in financial literacy, they’re bound to mishandle their money in the future, bringing several issues in their adulthood. That’s why teaching financial management students early on is ideal, helping them avoid succumbing to bad money habits or getting influenced by others to engage in other poor financial practices.
Overall, teaching students financial management or youth financial literacy, in general, is crucial. If proper education regarding money is provided during one’s youth, they’re likely to implement what they learn until adulthood — helping shape a financially responsible adult generation over time.