The Future of Financial Literacy Education
Financial literacy is a critical yet often overlooked component of education, and essential for leading a responsible life in general. If people become financially literate early in life, they are better able to make sound decisions both in their future business endeavors and in their daily lives.
The urgency of institutionalizing this type of education is clear: Research shows that the vast majority of Americans live from paycheck to paycheck, and more than half of them do not maintain a monthly budget.
This article will explore the specific advantages of becoming financially literate, as well as some of the challenges people and institutions face in the process. Finally, we will look at where trends are heading for education in this area.
The Advantages of Being Financially Literate
There are multiple advantages to being financially literate. If you want to become a small business owner, it is essential that you gain a thorough understanding of basic financial concepts before you start planning for your business. And the earlier you start, the better. These skills include the following:
Knowledge Of Banking And Financial Services Overall
This includes various banking products, such as different kinds of accounts, and how credit cards, loans, and mortgages work. Good financial literacy programs teach people what feasible options are for them.
The Ability To Create And Manage A Budget Properly
There are many finer points to creating and maintaining budgets that you might not be aware of. Particularly if you are going into business, you should familiarize yourself with the categories people actually use to manage their expenses.
Knowledge Of How To Create Retirement Plans
It’s never too early to start on this, so you should learn what options are out there and which ones you can invest in at different stages in your career. Even if you are paying a Social Security tax, many people invest in additional retirement plans because Social Security only covers a certain amount.
Understanding How To Trim Extraneous Costs
By being financially literate, you will become more aware of how extra spending can gradually add up over time, and figure out how to prevent this.
Familiarity With Investment Options
For anyone looking to grow financially – whether you are an individual or a business owner – it is essential that you become familiarized with options for investing. This includes stocks, bonds, real estate, and other areas that you might want to invest in.
How To Manage Debt
If you have debt, you need to learn how to manage it properly. Paying back your debt can be a manageable process, but you need to learn how to do it the right way.
These are just some of the things that you will gain from learning financial skills before establishing your business. Gaining a thorough grasp of these concepts will help you stay on top of your personal and professional finances in the long term.
Current Challenges of Financial Literacy
For all the benefits that financial literacy offers, there are also a fair number of challenges involved. This includes the following:
Low Priority Among Educational Institutions
At both the school and university levels, courses in financial literacy are insufficiently prioritized. For students who major in finance in college, there are high-level courses available. But basic financial literacy is not often given the attention that it deserves. Many students also simply think that the subject is not worth their time if they are primarily focusing on other subjects.
Lack Of Standardized Curricula
If schools were to place greater priority on financial literacy, they would need to standardize the material offered. There are too few textbooks on the subject and not enough will among experts to move in this direction. In addition, there is a wide discrepancy in financial literacy requirements from state to state in the US. In order to effectively promote higher standards in the subject, states should coordinate their efforts to a greater degree.
Personal Reluctance On The Part Of Families
Although subjects like “home economics” were once taught in schools, many educators and families have come to believe that these concepts should be learned at home. However, many families lack the knowledge to impart this information to their children, so people remain ignorant.
The future of this area potentially holds many bright prospects. As the world becomes increasingly digitized and financial assets reachable for a greater percentage of the population, so too are the possibilities for education in the field expanding.
Therefore, it is a good idea to start your kids on the right path as early as possible. Teaching kids financial literacy not only makes them more responsible but being exposes them to fun, exciting programs that can inspire young people to go into business from an early age.
Online Tools for Kids and Adults Are Growing
Both the ways that we conduct financial transactions, as well as the ways that we learn about them are transforming. The world is becoming increasingly digitized, and therefore it is easy to go online, search for courses in certain areas, and simply tap into them right away. Webinars, videos, and websites that teach financial skills are becoming much more common.
There are also an increasing number of interactive apps available for both kids and adults. For example, World of Money covers a range of topics related to all manner of personal and potential business-related financial management, including how to earn money, how to save, invest, etc. It provides sections with quizzes at the end and different levels for learners from 7 to adults.
Online tools also include apps related to specific financial skills, such as investing. For example, Investmate provides explanatory information about different kinds of investments, as well as historical lessons on such things as the 2008 financial crisis.
Apps and interactive websites now exist for pretty much any aspect of finance you might be interested in. All you have to do is search around, and you’ll have a wealth of options to choose from.
Requirements Are Starting to Increase at the School Level
Things are starting to change at the school level, as well, albeit not as quickly as some people might hope. Since 2018, the number of states that have integrated financial literacy into their curricula has increased by over 400%.
There are now 30 states that offer these types of courses at the high school level. While financial literacy courses are not a requirement in all states (21 of them require a course for graduation), the trend is definitely increasing. The availability of formal courses, combined with extracurricular apps, websites, and other widely-available tools is proving to be a promising development in the area of financial literacy.
Although the formal educational system in the US hasn’t tended to prioritize financial literacy in the past, this is definitely starting to change. Hopefully, universities will start following the lead of schools and offer more financial literacy courses to non-majors.
Fortunately, there are many tools available these days that are enjoyable and educational, and which can keep people engaged as they learn. These tools and an increase in formal education requirements will provide a much-improved foundation for future generations in business and in life.