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Why Personal Finance Should Be Taught In High School
October 1, 2019● 4 minute read●
In this world, there’s one lesson we all learn pretty quickly. Money touches everything. From where we live to what we eat to what we do every day – money makes the world go round. Yet, for many of us, we don’t really learn the intricacies of personal finance until much later on in life. A lot of schools don’t go beyond the basics of money, leaving essentials such as mortgages, taxes, investing and superannuation unknown or vague.
That lack of knowledge definitely takes its toll.
In a recent report, the average Aussie scored an abysmal 48 out of 100 in the Financial Consciousness Index (FCI). The FCI measures the extent to which a person is financially literate, as well as how conscious they are of their ability to affect their own financial outcomes. So, it’s concerning to see that for the 18 to 24 bracket, the score was even lower at 44. Based on the index’s measures, that means finances to the average young Australian are “a bit of a blur”.
For young Australians, debt is also a huge problem with a third of households considered “over-indebted”. Basically, that means they owe three or more times their income or 75 per cent or more of the value of their assets.
It’s true that with age comes wisdom. But, if these stats are anything to go by – are we really doing enough to ensure the younger generation are prepared for the adult financial world?
Moneysmart Schools: How The Current System Is Working
Since the global financial crisis in 2007, the Australian government has put a whopping $10 million into their Helping our Children Understand Finance Policy and other related initiatives. ASIC’s implemented the MoneySmart Teaching Program in 2012, which aims to arm teachers with the resources to deliver financial literacy education and effectively develop students’ understanding of money.
And it seems to be working! Schools registered as ‘MoneySmart Schools’ have strong levels of financial literacy and student interest. However, only a small number of engaged schools progress to registration. Ultimately, that means many students across the country are missing out on opportunities to increase their financial literacy.
At Jacaranda, we believe personal finance should be taught in every high school. Here are four main reasons why:
4 Reasons Why Personal Finance Should Be Taught To Students
Personal finance is pivotal in the development of a positive relationship with money. Here are a few reasons why Aussie students should be taught personal finance at school.
1. Poor Financial Literacy Has Consequences
Money can be the source of a lot of stress for adults. Rarely do we go through life without feeling some financial pain? In other words, everyone is bound to deal with a hurdle eventually – especially when it comes to debt. It’s almost unavoidable – between credit cards, mortgages, and so on.
Yet, when we don’t understand the full consequences of our money management, we can get stuck on a debt treadmill. Also, grinding away at our job but never accumulating any real wealth. Stress is one thing, but financial problems can negatively impact our health, relationships and mental wellbeing.
A lot of these issues could be prevented with the right education and awareness. The sooner we learn – the better.
2. Parents Aren’t Always Reliable Sources
What we don’t learn from school and our friends, we learn from our parents. Parents can be a great source of knowledge when it comes to personal finance, having dealt with it themselves for many years. Yet, they can also model negative financial behaviour to us and contribute to misinformation. That’s not to say that all parents are incapable of teaching their kids about personal finance, but not all parents can.
When it comes to education, schools allow kids to access factual information from an impartial source. The resources they can provide to kids are also generally more comprehensive and up to date.
At the end of the day, if we’re to equip the younger generation with strong financial literacy, we can’t just rely on parents to carry the burden alone!
3. Students Typically Jump Straight From School And Into Debt
Understanding personal finance is, arguably, more important than ever for students thanks to higher education. For most teens, continuing their studies is a natural and often necessary progression towards a career. Yet, qualifications don’t come cheap!
According to the Australian Government, HELP debts have now reached over $2.9 million. So, when you factor in that it takes students around 9 years to repay their HELP. That’s a long time to be carrying the burden of debt.
Although there aren’t many alternatives to HELP, some students don’t understand the full implications of the loan. Understanding debt, the different ways to pay for things, and the terms of repayments – can go a long way in helping students to make smart decisions about their future.
4. Financial Stability Can Lead To A Healthier Life
There’s no denying the link between financial stability and physical health. Studies by the Australian Psychological Society have found personal finances to be a main source of stress for Australians. Among other things, stress and anxiety can impact a person’s sleep, mood and blood pressure.
On the flip side of this, understanding how to manage money effectively leads to financial health. Plus, more money and less debt are good for the economy as a whole. Ultimately, having a financial education can help reduce financial stress later on in life by teaching:
- Good saving habits
- Budgeting and money management
- Investment and wealth-building strategies
- The basics of ‘credit’ and how it can impact a person’s ability to get a job, access finance, and rent a property
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Written by Jacaranda Team