News from late December 2017 showed that the average American owes $15k in various personal debts. Much of this can be attributed to financial illiteracy. In earlier decades, it was difficult to simply step into so much debt with the options restricted and the need lessened. Modern students simply aren’t aware of the risks.
There is plenty that school leaders can do to help give their students the life lessons they need. Investing in student data analysis training is one, and through sophisticated software and analysis you can identify the at-risk students who might need the extra push. That aside, what essential lessons should you be teaching? And what’s the boundary between parent and teacher responsibility?
Getting the Basics
A lot of financial issues in later life stem from an inability to do the basics. Unfortunately, many parents can find finances a taboo topic. It’s unarguable, however, that important financial lessons should be taught by parents—the basics of how money works, and how work is required to obtain new things. Parents should be teaching children to follow their wealth and develop plans for the year ahead. By using a calendar system in which expenses are mapped out, it can prevent nasty surprises. Furthermore, by mapping quiet periods, young people have better opportunities for building wealth, allowing for a rosier financial makeup.
Where educators should specifically be aiding learning is a contentious issue, however. Where do they step in? Arguably, the best time for educators to step in is where specific and complex mathematical theories become a part of financial planning, and can tie into the lessons taught in “regular” classes. This can be important especially where math is concerned. The theories taught by math classes often suffer under the stereotype that they don’t have real world application. By showing how they can be used when considering real-life situations, educators can increase student engagement.
Making the Most
Due to social media, advertising has reached new levels and means that many offers from retailers and banks are provided, as opposed to any impetus being suggested to go and find them. The result is that many people are now happy with what they’re given and aren’t spending their money wisely.
Students should be taught to always look for better value in every purchase, and seek out cost savings and deals where they can. This can be linked to the general ethics of hard work and determination—these are often applied to studies and exams, and should be applied elsewhere in life. Educators can consider extending their “soft skills” educational plans to focus on applying good work ethic when investigating financial opportunities.
Educators can also take some responsibility in this area by using financial management education to educate students as to the meanings of the terminology used by lenders. With complex mathematics often involved, schooling time and math education can be valuable time to impart knowledge—for example, teaching how to calculate APR and advocating awareness of politics, as they so often influence interest rates. Some of these schemes elude even parents in their complexity and it can be beneficial for schools to create the knowledge.
Figuring Out Savings & Debt
Debt may be an inevitability for many students. (University is often paid for via student loans.) Whilst preferable to “everyday” loans, these are still what they say on the tin—a loan—with all of the interest rates and consequences of non-payment attached. That doesn’t mean it should be managed poorly. Similarly, the importance of savings should be emphasized to students from a suitable age. Whilst retirement is the last thing on the mind of most young people, it’s worth planting the knowledge early so paychecks aren’t spent for the sake of it when the time comes.
The early-life knowledge of how important it is to have meaningful savings is clearly a task for parents, though schools can come into play. When it comes to student loans, however, educators could explore the option of providing seminars in which options are explored and evaluated for students across the spectrum—from scholarships down to fully-paid college applicants.
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