The Importance Of Financial Literacy In School Curriculums

Financial literacy is the ability to understand and effectively use various financial skills, including personal financial management, budgeting and investing. Essentially, it refers to your ability to understand and manage your finances. Being financially literate leads to various benefits such as being able to make rational decisions hence avoiding financial traps and scams that lead to financial troubles such as debt. Acquiring knowledge related to financial literacy enables individuals to plan their future effectively and empowers them to achieve their financial goals which contributes to the growth and development of a nation.

Hence, not only is financial literacy important and impactful for individuals but also to a society as a whole because it promotes economic participation, leads to reducing relative and absolute poverty and fosters socioeconomic mobility (how a person’s socio-economic situation improves or declines relative to that of their parents/ throughout their lifetime). Moreover, according to the corporate finance institute, being financially literate helps reduce and stabilize stress and anxiety for individuals over time which is proven to help them live a happier and healthier life. Overall, being literate in managing finances helps increase living standards and increases financial stability.

A recent National Finance Olympiad report (12th january 2024) found that only 16% of students and 27% of adults in India are financially aware which is considerably low compared to the United Kingdom, Canada, US and Germany This lack of knowledge inevitably leads to a lot of perils like high debts, inadequate retirement savings and insufficient insurance coverage. High debt can increase interest rates in a nation as a result of the bank not receiving sufficient profit and finances from their borrowers. This negatively impacts all households. Likewise, inadequate retirement savings can add stress and anxiety and affect one’s overall quality of life. Plus, if a high percent of retired individuals lack a retirement plan it adds pressure on the government to satisfy their needs. Therefore, financial literacy should be taught, implemented and understood at a young age.

Schools like Aditya Birla World Academy In Mumbai and The Aga Khan Academy in Hyderabad are widely known for the way they start educating students about financial literacy during school hours. As reciprocated, financial literacy topics should be embedded in school curriculums so that students can be educated on understanding financial lessons which provides a sturdy base in students’ lives, so that they can have a successful financial future. While many countries (Denmark, US, UK) are integrating financial literacy into their school curricula, the extent of implementation varies.

Ongoing efforts aim to standardize and expand financial education to equip students with essential life skills, although the importance of it is still misunderstood. Here are some tools and online modules that can increase an individual’s financial literacy:

Econedlink: online financial lessons for K-12 students

Money Smart: Free financial tools such as podcasts, lesson plans and games to increase financial literacy

MoneyWi$e: in a partnership between Capital One and Consumer Action, MoneyWi$e provides free multilingual financial education

InCharge: dedicated to empowering consumers through personal financial management, InCharge provides online eBooks for educational purposes.

-Zaisha Lakhani