Speaking as an ex-teacher, I find it very sad that our students are leaving school with little if any financial literacy. Our young people for the most part leave school without receiving any financial literacy education.
The problems are even more deep seated than just not receiving any financial literacy education. As Robert Kiyosaki states in his book “If You Want To Be Rich and Happy Don’t Go to School?”. “It is my belief that the first duty of any society is to teach its people the basic skills necessary to be successful, happy, contributing citizens. Judging by what I have observed, our educational system has a long way to go before we can give it a passing grade. In most schools, students can get straight “A’s” throughout twelve, sixteen or more years of education, yet still not even have a basic understanding of those money-oriented skills that we need to survive and prosper in our society.”
Students, in many schools, are still being told that the key to a successful life is to get a good education, then get a good job where you are permanently employed. In this day and age very few employment positions are permanent.
It’s not. What do they need to learn in good financial literacy education? I believe the bare basics of financial literacy would include:
o Setting financial goals
o Creating your budget
o Itemizing your expenditures
o Planning for high-budget expenditures (including buying a home)
o Basics of banking (account types and interest rates)
o Basics of investing (into stocks, bonds and mutual funds)
o Planning for retirement
o Understanding the impact of inflation and interest on money and investments.
However there is more, much more. Our students need to know that they have to work towards a financial situation where they are not dependent on their employment as a source of income. One strategy would go something like this. Their car shouldn’t be a new one. A good reliable second hand car is all they need.
The first house they buy should be a rental property. When their equity increases in the first house, this increased equity is their deposit on a second house and so on. They will get to a stage where their rental income will be enough to let them buy their own house and their dream car. There’s more top the strategy but that can come later.