With the economy beginning to recover from the effects of the pandemic, financial literacy is important. Good financial habits and a strong mindset are crucial for everyone, including students. Although there is no specific age to begin, mentors and educators should start imparting basic knowledge about money as soon as they feel the child is ready. Start with the basics of making a budget, spending and saving, as every step a person takes from graduation to retirement is directly or indirectly linked with how well he/she manages the money in hand. Financial management cannot be learned overnight; it is an ongoing process that demands years of understanding and experience to actually make it a habit. Therefore, early exposure to money-related affairs along with proper guidance is imperative.
The formal education at micro and the macro levels starts during secondary education when students are exposed to concepts such as functioning of a bank, the workings of money management and why managing personal finance is essential. At this point, reading books like Robert T Kiyosaki’s Rich Dad, Poor Dad, Beth Kobliner’s Get a Financial Life or Eric Tyson’s Personal Finance for Dummies will teach them about real-life financial issues. Their understanding of the fundamentals of budgeting, savings, investment and earning will influence every phase of life.
Practical learning has always been more impactful when compared to theoretical knowledge. Students who receive pocket money should be encouraged to save a certain amount regularly and deposit it in a bank account. This will help them work out a budget and manage their costs with the balance. All this will help shape their financial habits. Students should also be informed about the multiple investment vehicles available, the pros and cons of each and how to navigate a financial system.
The most important purpose of money is its transactional behaviour and, therefore, they should know that savings are meant for specific or emergency requirements and that not all the pocket money needs to be saved.
Thus, financial education for students is a necessity, as it promotes the habit of saving, teaches awareness and responsibility, helps them keep a check on spending, and build a positive attitude around money.
The writer is a passive income coach and founder of AskTheWiseGuy.