The importance of teaching financial literacy in schools
How often have we read articles about children who squandered their inheritance money or how they trusted quick “get rich” schemes and were duped out of it?How many times have we seen an employee who worked tirelessly for 30+ years and went on retirement, only to splurge away their pension payouts and suffer in their old age?
Or how many young people currently employed are living from paycheck to paycheck with debts overwhelming them, credit cards here, over-drafts there, revolving loans, the list is endless.
The most common reason is that many heirs, pensioners or even the young workforce are simply inexperienced at handling money. A million dollars can be put to so much good use. However, once it is spent recklessly, it can no longer produce income.
Isn’t it amazing that we all completed high school knowing algebra, the scientific table, and the human anatomy, but not how to open a bank account, how to file a tax return, the importance of having funeral covers or even something as simple as budgeting and saving?
The current education system does not teach simple money management habits/techniques to children. Most young people graduate from universities or start new businesses with no financial foundation. As a society we lack basic financial literacy, thus teaching financial literacy in schools is critical in passing on general wealth.
Financial attitudes and habits are moulded at a very young age. It is extremely important to expose children on to how to use money wisely and for smart financial decision-making. School curricula can range from budgeting and cash flows so that young people understand the concept of ‘money in, money out’ and how it will impact them in the long term.
Our young people need to know how loans work, how interest is charged on these loans and how it can impact their financial situation in the long run.
Notwithstanding the above, the importance of retirement planning – the power of putting a little bit of money away today and where that can land you in the future – is critical. By teaching financial literacy in schools, we can change the narrative from poverty to a debt-free lifestyle, from inheritance money being a “curse” to a gift.
Furthermore, we can pass on generational wealth by enabling our youth to make informed decisions.
Debt cycle
In this digital and social media era, we find that our young people take out a personal loan today just to finance a trip to Paris or Bali, only to realise that upon their return, they must start repaying this loan at very high interest for four years, just to take out another loan to offset that and find themselves in a pool of financial difficulty.
I know that many might argue that if you are a high school teenager, you most likely don’t have much money, you don’t have access to credit, and you don’t have a job - so is there any point in teaching a youngster about savings, investing, taxes or budgeting?
Yet many of us were taught religious, moral education and life skills in school that shaped us in many ways for life. We learned the basic principles of respect, sharing, caring and discovering our identity. Another subject that was introduced in recent years is entrepreneurship because it uses developing real-world skills that help learners lead exceptional lives in a rapidly changing world by teaching them to think outside the box.
Many western countries have introduced Financial Literacy in their school curricula, including Australia, Canada, Denmark, Finland, Germany, Israel, the Netherlands, Norway and Sweden.
The current Namibian school curriculum equips children with how to be great doctors and individuals with business skills. Since the children of today are going to be the leaders of tomorrow, financial literacy will equip them with the skills they will need to become financially literate adults.
In the end, their future and that of our country depends on it.
*Imilda Gases is a Financial Accountant at the Government Institutions Pension Fund. The views expressed in this article are her own and do not represent those of her employer.
** Opinion pieces and letters by the public do not necessarily reflect the opinion of the editorial team. The editors reserve the right to abridge original texts. All newspapers of Namibia Media Holdings adhere to the Code of Ethics for Namibian Media, a code established jointly with the Media Ombudsman.