The idea of young adults leaving school with no idea about financial management is one which should strike fear into the hearts of each and every parent. The problem is that financial management is not seen as an important part of the curriculum and therefore very few, if any, schools ensure your children are ready for the big bad world. So, this begs the question, should financial management be taught in schools?
Organising your finances
In your early school years money will not be an issue but as you grow older, perhaps take a part-time job and look to the future, organising your finances will be a vital part of your everyday activities. How many children leave school knowing the price of a pint of milk? How many would know how to insure a vehicle? Where do you start with pensions and long-term financial planning?
The earlier children are able to familiarise themselves with financial management the easier it will be when they get older. In many cases it will be a seamless process moving from school to a working life and organising their finances around that. So, why do schools refuse to add financial management to the curriculum?
Mortgages
The ability and opportunity to acquire property in your early adult life will obviously vary from country to country and state to state. It would be far easier if young adults left school with at least a basic knowledge of the mortgage market and how it works. This will give them something to aim for when they leave school and move into the employment market – the opportunity to “own your own home” is still attractive to many people.
Alternatively, there is also the rental market for those not in a position to consider a property purchase. This can be fraught with potential hurdles and issues unless you know what you are looking for, know exactly what you are signing and above all know your rights as a tenant.
Long-term financial planning
Whether you’re looking at savings plans, insurance bonds, pension plans or long-term investment on the stock market, long-term financial planning will be a major part of anybody’s life going forward. As the cost of living continues to grow so those with employment and income will be expected to take a greater burden on themselves and excuse the government from future financial liabilities. Many will argue as we all pay our taxes we should be as entitled as the next person to receive government assistance in retirement – unfortunately this is unlikely to be the case in the longer term.
The sooner an individual begins their own pension plan, even if it is a relatively small amount, the greater the benefits in the longer term. It would be useful if schools could educate children/young adults about the investment opportunities available to them, taking in low risk and high risk investment. This is not to suggest that high risk investments are suitable for young adults but it would give them a broader understanding of the markets.
Conclusion
We have only just scratched the surface on the issue of financial planning and whether this should be taught in schools. It is bizarre to think we let children/young adults leave school with little or no knowledge about the cost of living and financial planning. Many have to learn from their parents or indeed build their own experience and knowledge base going forward. Surely if we at least make children aware of the cost of living, and other financial issues, at an early age they would be less inclined to panic in the future?