Financial Literacy in Schools and its Importance

Financial Literacy

Do you remember how our parents told us to save money using “piggy banks,” or when relatives gave us money after some function, parents took them and saved it for our future needs? Financial literacy is not a new term! As a child from a very early age, we have been taught about the concept of saving. However, formally understanding it in terms of financial literacy is the need of the hour as one gets exposed to various finance tools, learning, and methods.

The 21st-century world sees rapid growth in the field of literacy, and as the demographic dividend increases, it is necessary to tool them up with financial literacy too. As per the definition provided by OECD (Organisation for Economic Co-operation and Development), financial literacy is a “combination of financial awareness, skills, knowledge, attitude, and behaviour that are necessary to make sound financial decisions and achieve individual financial well-being.”

To make people financially literate, the curriculum for financial literacy must be included in the school itself so that young children are receptive to managing their finances from an early age. Especially with the technology and economic evolution that countries are seeing, it is essential that children have know-how about everything present near them and can better understand everything as soon as they start financial handling.

Need for Financial Literacy in Schools:

– Children are more receptive towards new learning. When they are told about the basics of financial literacy, it makes them smart and ensures their skill development and a base for the future.

– Finance won’t seem like a burden to them when they grow up as they have ample knowledge of how to save, spend, and earn from a young age.

– It instils entrepreneurial skills within them to have proper financial planning before delving into anything. They can make better decisions, and even in case of failures, they will be well prepared for future opportunities of any similar kind.

– It makes children more responsible in their manner of spending and they will carefully understand any situation to avoid any reckless spending even if they see someone else doing it.

– Continuous teaching helps in value addition from a young age. A topic like financial literacy cannot be taught overnight. So, one must get to learn about them from the beginning.

Reports and Studies by Organisations:

  • According to the Global Financial Literacy Survey by Standard & Poor’s Rating, around 35 percent of men and 30% of women worldwide are financially literate. This shows a considerable gap in the number that has not been touched by financial literacy.
  • In India, Public Provident Fund (PPF) can be opened by a guardian for their children at Rs 100 only. Many public experts think that if guardians initiate such measures, children will be more responsible financially to take up PPF when they grow up.
  • National Stock Exchange (the leading stock exchange in India) offers financial education programs in around 4,000 schools across six states of India- Nagaland, Gujarat, Himachal Pradesh, Goa, Tamil Nadu, and Punjab.
  • The National Centre of Financial Education has certified ‘Money Smart’ schools for financial education among students using free workbooks.
  • OECD, in 2005, recommended the importance of financial literacy, and as a result, many countries have included it as a part of the school curriculum. As per the framework set by them-

– Financial literacy must be started at a young age and should continue till the end of school life.

– Adequate training must be provided to teachers to increase their proficiency in financial learning.

– Progress of students in financial education must be tracked, and assessment must be conducted.

– Financial education should be a part of a well-coordinated national strategy.

How can you achieve financial literacy?

As CBSE schools have implemented a few courses like financial management, insurance, etc., as a course in the senior level of classes, this will be helpful for students to get a hold of financial literacy. One should involve their children in financial planning and expenditure management at home. Instead of considering it a burden, they must be talked through the necessity of financial management.

Parents can look for online and offline courses available for students, to begin with, and enrol them. As a practice, parents can start giving them a monthly allowance for some necessary expenditures and check with them on how they manage and give them lessons. Children can even be taken to grocery shopping to teach them how selective and need-based shopping works. Games based on financial literacy like real estate, selling, monopoly, etc., can be played with them in online and offline mode.

At eduTinker, we provide an online learning management system that helps schools with curriculum designing and sharing resources with children. To know more about our services, please feel free to email us