Financial education as a concept is one that few people disagree with. In the US, UK and even across Europe, there is a growing chorus calling for financial literacy to be introduced into schools and colleges.
Following are five reasons why financial education matters more than ever.
1.Managing money is an essential life skill. Access to credit has become more restrictive in recent years. Budgeting, not borrowing and managing money effectively are essential life skills and require structured teaching and testing if students and young adults are to become effective money managers.
2. We live in a credit society. Across the world, there is greater dependency on the use of credit. It is used more ways than ever to manage our day-to-day lives, including paying for education, travel and even our groceries. While convenient, if used poorly, credit can prove really, really expensive.
3. A poor relationship with money will have far-reaching consequences. Personal credit reports matter more than ever. They are used by landlords, employers, hospitals…and credit providers. A poor credit record will have far-reaching personal consequences. This is why understanding the consequences of a poor relationship with money is really important if students and young adults are to increase their own chances of success in life.
4. Money is becoming invisible. Each year, a growing percentage of the money we earn and the bills we pay is processed and transacted digitally. While convenient, this results in falling visibility of money resulting in it becoming more and more abstract. Teaching students and young adults the practical aspects of money will provide them with the essential skills to make more informed money decisions.
5. Even adults sometimes get money wrong. In a range of recent surveys, many adults admit they didn’t know the rate of interest they pay on their credit cards or monthly banking fees they are liable for. In one survey, some 17% of adults said they thought credit card borrowing represented good value for money (credit cards are in fact one of the most expensive forms of borrowing when a balance is carried over from month to month).
MoneyWhizz (www.moneywhizz.org) has developed a new financial literacy programme available on demand to schools, credit unions and other major stakeholders. The programme is the first available as an e-learning resource.