Financial Education as a Subject in Schools Essay
Money is an overwhelmingly popular subject. Preschoolers, youths, adults, and aged people all appear to be relevant when it comes to money. This subject fascinates me because most commodities that concern and controls human lives are never taught in school. If they are taught, the information presented is either outdated or insufficient. For example, in business classes, students are taught that a house is an asset. Banks will relate to the similar phrase when granting one a loan. However, considering that I will spend some amount on maintenance of the house, payment of electricity and water bills, and other expenses, it becomes clear that the house is presently a liability. However, it could be an asset if I had tenants in it. Financial issues are rarely discussed in classes and at home which makes them more challenging when someone wants to introduce relatable topic of conversations.
People often work for their entire lives to pay a never-ending mortgage. Interest-surging rates have families emotionally exhausted because of psychological stress. Financial concerns limit family vacation periods, and more so, where they can go. Banks gladly offer mortgages. Still, they imply that a house is an asset to the family. However, an asset is bound to provide additional benefit to the owner through creation of money. In this case, banks are liars for long-term loans benefit them and not the owners. On the other hand, such a discrepancy may mean that the education system is corrupt for it is leading students who become the workforce in the wrong direction.
Mortgage attracts interest which the borrower has to pay. The bank profits from the principal mortgage amount it lent. A careful borrower has to think about this process if they are to comprehend the gravity of the situation successfully. The relative balance sheets define the asset. The bank’s balance sheet indicates an asset because they give a long-term loan that is reaping benefits in terms of interest. For the family, the loan is a liability in the form of a house. For as long as the house is a family home, it remains a liability. However, if the loan is spent on building rental houses, then it is a great idea. The buildings will guarantee a regular income to the family.
The inclusion of finance as a subject in modern education system is likely to mitigate some of the problems old people, especially retired civil servants and pensioners, have to fave. Pension schemes include 401k plans that provide a safety net for the employed. People are lured into these financial operations because they rarely understand the repercussions of their decisions in the long-term. One may compare the prices of one pound of bacon or a gallon of milk in 2008 and 2018. These products are consumables and basic necessities. In 2008, 1 pound of bacon was $2.96, while in 2018 it is at $4.48. The price of a gallon of milk increased from $2.65 to $3.22 in the same period. This trend implies that as the working class continues to save their money in the pension plans, their money is losing value at a distressing rate. They are oblivious of this situation because they have little financial literacy. When the retirement period approaches, the retirees are unable to find a suitable investment plan, because the current interest rates cannot accommodate them.
A conscious understanding of the money game from a young age is vital in many ways. When one is looking for an investment in their later years, it is, in most cases, a speculative move. Business is usually characterized by risk against reward. If the worst-case scenario of losing the money comes to pass, chances are the individual will be overwhelmed by stress. Subsequently, these people may suffer from mental disorders such as depression. Depression is primarily a mood disorder that leads to severe consequences such as suicide, self-injury, and mental breakdown. Scholars suggest that by 2020, it will be the second leading cause of disability globally (Bromet et al. 1). In my opinion, these are negative effects that humanity can avoid on the condition that concerted efforts to improve the situation are made. Children at a young can be taught valuable and advantageous lessons on money. For instance, teaching a child the various saving techniques is a profound lesson. Norman (199) notes, “those who save money realize the fact that wise spending leads to saving and hence investing.” Thus, the sole reason that households suffer from insufficient funds is that they spend unwisely. “Money is evil,” “Money is not planted in gardens,” etc. are are just some of the phrases that such people use to justify themselves. Most parents ingrain such negativity in their children because of the lessons taught to them. Nevertheless, the notion that money is scarce which is false. Instead, the parents should be relaying positive messages to their children like the need for saving. In addition, children need to understand that they have to work for money to achieve the success they desire. Otherwise, scary phrases will result in them refusing opportunities that could advance the family’s fortunes.
Introducing financial education in the school system is not an easy task because there are many stakeholders involved in the process. The government is the greatest stakeholder and can easily and greatly influence the success of this initiative. The community and the parents should be informed on the benefits of financial education. Financial literacy is responsible for improved outcomes among households and individuals. It shapes money-related decisions and is a vital component in the reduction of wealth inequality (Michaud 2). It should be remembered that income disparity in the world is growing at an immense rate. The acquisition of financial education is likely to result in improved life outcomes. It would be great if the aged reduce the burden of responsibility that they place on their children’s shoulders. In addition, a youth can easily take a risk, fail, and recuperate. Such freedom is not available an older person.
Financial education is a rarely discussed subject. Families do not dedicate time to teach their children about money matters. However, parents should one the ones give these skills to children. Simple practices like budgeting are extremely important to the young brain of a child. Additionally, while parents influence their progenies to a certain degree, the main education should take place in schools. Business curricula should strive to offer detailed information on relevant subjects. If the schools are keener to play a significant role in shaping the future, they should at least start with offering commendable financial literacy to the students.
Works Cited
Bromet, Evelyn, et al. “Cross-National Epidemiology of DSM-IV Major Depressive Episode.” BMC Medicine 9.1 (2011): 90.
Michaud, Pierre-Carl. “The Value of Financial literacy and Financial Education for Workers.” IZA World of Labor, 2017, wol.iza.org/uploads/articles/400/pdfs/the-value-of-financial-literacy-and-financial-education-for-workers.one-pager.pdf. Accessed 10 Dec. 2018.
Pearson, Stephen. “Our Current Price Basket of Goods, Services and Cost Of Living”. The People History, 2018, www.thepeoplehistory.com/pricebasket.html. Accessed 10 Dec. 2018.
