If ever there was a time for better financial education then surely it is now. When you look at the state of many of the economies around the world it’s a mystery why financial education is not compulsory schools. It is easy to blame banks, big business or governments for the current climate but it is the education of individuals that need to change.
At school, we may have learned some skills necessary to get a job, but nobody tells us how to create or manage our wealth. If we cannot educate ourselves on ways to obtain and retain our money, we are headed for a future financial disaster.
In the USA, individual debt is growing 23 times faster than the economy. It is a similar situation in many other developed nations, for example the credit card debt in the UK is over £220bn or an average of £3175 per person. Thousands of college graduates who have invested in their education are facing a student loan crisis. The job market is shrinking, and the sour economy is preventing employers, parents and relatives from helping those who are behind on payments,” USA Today reports. “Student loan defaults are at their highest rate since 1998, and likely will go higher” People are even losing their homes and have no money to retire on. It is estimated that the average person today will require $1.5 million by 65 years of age to retire comfortably.
Some argue that a better way to teach children about money is in the home, which may have its merits but may create something of a vicious circle: when parents are financially illiterate – they’re not likely to teach their kids very well, are they? Which means that the minority of people, who are smart about money, will (potentially), raise kids who are also smart, while for the rest the cycle will continue.
Another argument put forward against financial education in schools, centres on the twin pillars of lack of time and lack of money. School curricula are already crowded places and a significant financial education programme would have to come at the expense of something already in place. Few teachers would have the necessary competence and confidence to deliver such programmes without the need for additional training and resourcing.
These arguments may be countered by providing financial education online or via other media accessible to students, and indeed their parents, 24/7. Young people will spend hours studying independently for subjects with a real personal interest, playing an instrument, making a MySpace page or learning to drive for example.
Funding may not be such an easy nut to crack but there are existing projects sponsored by banks and financial institutions around the world. Dissenting voices would point out however that if it was the banks that got us into this mess are they the best influence to help educate the next generation? Governments may also see the longer term benefits of providing financial education as saving them the money they may otherwise have to spend on social security in the future.
In conclusion it would appear that there is a growing tide of public opinion supporting the need for better financial education, which in my opinion should at least begin in schools. The debate will continue as to who should deliver what and when but in the meantime, parents and young people themselves can take a proactive approach and seek the resources currently available.
A great source for younger children is The Financial Fairy Tales series, which introduce money principles and awareness via entertaining and engaging stories.