Why Teach About Personal Finance?
According to Mary Hiers, of Mint.com, below are the top three reasons why personal finance skills need to be taught to young adults going into or currently in high school (paraphrased from Hiers' article here:https://blog.mint.com/planning/3-reasons-why-personal-finance-should-be-taught-in-high-schools-1113/ ).
Why teach about personal finance? In high school, some students are getting their first job, some are planning for college, and some are simply eager to start saving up. Money is such a relevant part of a young adult’s life and will continue to be for the duration of their life, so we believe that it is important to understand how to take control of finances
Below are the top three reasons why many believe that personal finance skills need to be taught to young adults going into or currently in high school.
“Money Management Is a Learned Skill”
It takes practice to learn basketball. Famous basketball players were not born able to do the things that they are able to do today. Imagine a baby shooting three pointers and dunking on opponents. Seems silly right? Basketball players need to be taught how to dribble, shoot, run, etc. in order to get into a professional position. Basketball players also cannot learn basketball from parents who either don’t know how to play or don’t fully understand all of the skills required to be a professional player.
Similarly, students aren’t expected to understand personal finances until they are taught in some way. In order to create financial literacy and increase money management knowledge, it needs to be learned. We want future generations to be able to take control of their money and make educated decisions based on understanding so we teach them.
Students learn the skills to perfect the skills. With enough training and gathered knowledge, money management can be a breeze!
“The Sooner Education Starts, The Better”
Ever tried to break a habit? It is hard to say the least. That is why it is better to start learning about personal finance early so that good money management decisions become habit.
It can be difficult at first to understand why creating a spending plan is important or how to use a credit card but learning earlier rather than later helps lead to better financial decisions and creates a habit that is not easily broken.
If you considered starting financial education at 6 years old, the child will be learning about simple money management skills on a much smaller scale and will make smaller financial mistakes that they can learn from.
If financial education begins with college students, however, the scale is significantly larger and there is a greater risk for large financial mistakes.
The takeaway from these examples is that the earlier financial education starts, the better. Habits are difficult to break and hard to form so starting earlier creates a better chance for future financial success, good financial decision making, and a better understanding of money management
“Awareness Of The Bigger Concepts That Most Adults Will Face”
Not all financial concepts are understood...even by adults! Teaching students about personal finance allows them to understand some big concepts that they may face in the future so that they are able to find solutions with ease.
When big concepts such as investing or credit cards come up, students who have been taught about personal finance will be able to take a relaxed and informed approach instead of feeling fearful or anxious.
Consider student loans in college.
Without the knowledge of minimum payments or interest, it would be quite a shock to realize that your $20,000 loan is now even greater!
Students understanding concepts of interest or minimum payments for loans leads to an increased ability to take control of their finances and feel confident that they have it under control.
General understanding of bigger concepts leads students to confidently tackle issues that they might face in the future and take control of their finances.
Teaching personal finance helps create more confident, informed consumers who will be able to accurately make decisions that will help them in the future.
Your present self impacts your future self!