With the global economy impacting our country in key ways, financial literacy is becoming a necessary skill for people of all ages. Since many preteens and teenagers have a significant amount of disposable income and many are saving toward college expenses, teaching financial literacy in the modern curriculum is a valuable concept that can prepare the youngest generation for future budgetary success.
Perhaps a generation or two ago, many children and young adults had limited income and expenses to manage. But as more teens have taken part-time or even full-time jobs as a source of spending money or to cover cell phone and driving expenses, the need for money management skills is growing. While some parents provide hands-on budget training through allowances for house chores and light income from unskilled jobs like babysitting or yard work, many young people lack the skills to handle money. They are not learning to save money for long-term purchases or to plan lasting goals (like transportation) rather than short-term gratification (such as a night out with friends).
The K-12 school curriculum is an ideal venue for teaching kids how to appreciate and use money, especially their own, since their earning potential will only increase as they come of age.
Certain school systems around the country are integrating money awareness modules into the math curriculum for younger grades. Students as young as eight or nine can start learning how to budget money into important categories, such as monthly expenses, emergency fund, and savings, with discretionary spending a final category for funds otherwise undesignated. Giving to charity or religious giving is another optional category for consideration.
As students move toward the middle school years, they can learn how to problem-solve situations requiring money-related decisions, such as how much money to spend on holiday or birthday gifts. They begin to study investment principles for short-term gains, such as saving for a car when they get older or putting money in a college fund. At this stage they may be introduced to longer-term investment strategies for financial growth and eventual family needs.
By the time students take high school math and lifestyle classes, they will be learning how to make and follow a personal monthly budget, with specific categories for housing, food, utilities, transportation, and other basic needs. They may be taught long-range investment principles to begin saving for retirement, perhaps with the option of retiring early. Someone who invests just $1,000 by age twenty may be a millionnaire by retirement age. Those who invest even small amounts regularly can accumulate even larger sums over time due to the principle of compounding interest. When they graduate high school, ideally they should be financially equipped to manage their income and expenses if they decide to live on their own, or even if they still live at home.
On the other hand, students who are not taught financial literacy may never learn to handle money efficiently. They run the risk of overspending and underearning, and perhaps getting involved in consumer credit debt through credit cards, cash advances, and unsecured loans. One day they may even lose their homes to foreclosure because they don’t know how to manage mortgage payments. Financial literacy in school curricula just makes good cents!