Why is it important for schools to teach Personal Finance to students?
Personal finance isn’t alien to anyone. In fact, it is crucial to everyone and people of all ages from school students, college students, to working adults. A study conducted in the US showed, students in high school who were taught personal finance, do better in terms of credit scores after graduation and land up in fewer situations where they default on credit accounts than their counterparts who aren’t taught personal finance. I personally believe that having basic personal financial skills is crucial to living a happy, secure, and healthy life, as every step a person takes is directly or indirectly connected to how well one can manage money. It cannot be learned overnight; experience and habits are paramount and one can start with basics by making a budget regarding spending and savings. Hence early exposure to financial affairs along with proper guidance is crucial.
As someone who is part of the Indian Education System, I second the idea that Indians holding key positions across the world in every field is testimony to the ideology that Indian education is one of the finest, but at the same time, our system also needs a systemic change. We learn how to solve complex math & physics problems, study history, civics, and geography and yet the curriculum in schools is not linked with the needs of the actual world. I learned nothing about what are the things to keep in mind while taking a loan, or while finishing due diligence on taxes, etc. Thus, I believe that the delay of learning skills in financing has affected major milestones such as choosing a career, managing daily expenses, purchasing a home, etc.
WHAT WOULD THE BENEFITS BE IF I HAD LEARNT ABOUT PERSONAL FINANCE IN SCHOOL?
- Finance/Money affects everything
It is not only the major life events that are linked to financing, but it is a part of our everyday life. Whether it’s where we eat, what we buy, traveling, going out with friends, or negotiating prices, every day we are faced with financial decisions. The sooner I could have known that the greater head start it would have given me.
- Lack of financial knowledge has painful consequences
Students like me coming out of college in the upcoming years have more crippling student loans than ever. We as a generation are spending years trying to pay them off, which means we are saving less than we could. Being taught about debt, the different ways to pay for colleges, and the importance of not borrowing more than one can afford could help to prevent massive numbers of defaulters.
- Financial Literacy leads to a healthier life
It promotes good savings habits. Learning how to actively manage a budget leads to smart decisions which might positively impact the present and the future in ways unimaginable such as it may positively impact one’s credit score, paying off bills, etc.
- Awareness about important sections of the Income Tax Act
Section 80C allows one to reduce taxable income by making tax-saving investments or incurring eligible expenses. Why should important information like this be restricted to students studying business or chartered accountancy? If only schools taught how to keep an eye for crucial things like this, one could face less difficulty and more self-reliance while dealing with the law in the future.
I strongly believe that our salary does not make us rich, but it is our spending habits that determine that, and that is the very core idea of teaching personal finance at an early stage.