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As part of The Big Smoke’s Next Gen program in partnership with Platinum Asset Management, Billie Cooper (13) discusses the money management skills her peers are lacking, and how the responsibility does not solely lie with their parents.
Our parents teach us everything, from good habits, like using our manners, and valuable life lessons, such as “work hard for the things you want to achieve”. These lessons often shape our views on specific issues and who we grow up to be. However, there are some skills that our parents may not be prepared or equipped enough to teach their children before they leave home, one being vital everyday financial skills. Several studies support that a large percentage of Australians seem to have limited knowledge or management skills when it comes to managing their money.
A study from 2018 revealed that nearly 1 in 4 people aged 18 to 24 considered themselves “financially unstable,” primarily because of poor financial literacy and a lack of money management skills. So, where are young people expected to gain their knowledge to support themselves financially? Young people deserve and desperately need to be educated on the basic financial skills necessary for everyday life – it seems clear that Australian high schools need to teach finance as part of the general curriculum.
Finance classes aim to educate students about the fundamental concepts of money management, such as debt, loans and investments, to name a few. Finance and money management classes also cover the vital skills and requirements to maintain a financially stable life. These include topics such as budgeting, saving and how to pay taxes. This knowledge lays a foundation for kids and young adults to develop solid habits early on and avoid lifelong financial struggles.
A study from 2018 revealed that nearly 1 in 4 people aged 18 to 24 considered themselves “financially unstable,” primarily because of poor financial literacy and a lack of money management skills. So, where are young people expected to gain their knowledge to support themselves financially?
The value of money is almost lost in a society that doesn’t rely on real money as much as they used to. Not seeing physical money being exchanged for purchases makes it harder for children and young people to get their heads around what things actually cost. In a time of credit cards and internet banking, they might see this “invisible money” as an unlimited resource, rather than actual money coming from their bank accounts.
I quickly learned the value of money when I was around 11 years old. I had spent all of my birthday and Christmas money on silly knick-knacks instead of saving it, or setting aside a fraction of it for something worthwhile. When I really needed the money, I had none. It made me realise how easy it is for money to slip through your fingers. If we were educated about everyday finance and economics, we’d learn how to save and utilise the money we have. As we get older and develop more independence, it’s important to know how to handle our own finances.
Another example of why schools need to educate teens about everyday finance and economics is because this stage usually is when young people need to start saving up for the future. However, this age is also when many people begin to develop more independence, meaning that there are more chances to spend your money without thinking.
Finance is becoming more and more sophisticated in modern time. Most young people are unaware of concepts such as compound interest, market gains as well as the associated fees, charges and tax implications that come with saving and investing. The benefit of teaching financial literacy at school is simple – it should help to protect young people from a lifetime of financial pressure.
Bank loans – they provide several benefits, as well as instant funding, but they can quickly turn into severe financial traps if not managed correctly. Young adults may be quick to take out a bank loan, but the high chance of falling into further debt makes it almost not worth the risk. However, if young people were educated about the fundamental concepts of loans and debt in high school, they would be more cautious about taking out a loan, and more likely to pay it back when required.
Saving is another area that many young people struggle with. We all know how easy it is to waste money, and that without some serious budgeting and saving, spending can quickly spiral out of control. If young people don’t learn to budget in a way that tells them exactly when their income will arrive, what they need to spend money on and when their bills are due, they can rapidly end up with less cash than expected to pay their bills.
By educating them at an early age, schools will be helping to enable young people to secure themselves a more stable financial future.
By educating them at an early age, schools will be helping to enable young people to secure themselves a more stable financial future. This includes managing the money they work hard for, making wise spending, investing and saving choices, as well as preparing them for life’s unexpected (and sometimes expensive) ups and downs.
It’s clear that a large percentage of Australians cannot properly manage their money, and this includes parents and millennials. Young people desperately need and deserve to be taught the basics of finance in high school. This is not only to set them up to thrive on the money they work hard for, but also to protect them from financial pressure in the future. Schools need to emphasise to young adults how to save, budget and manage the money that they work hard for.
This article is part of a series for The Big Smoke’s Next Gen program, in partnership with Platinum Asset Management.
The Big Smoke Next Gen is a program which matches professional and experienced writers, academics and journalists with students who wish to write non-fiction articles and voice their opinions on what is shaping the nation.
For more information about our program at The Big Smoke, or to become a mentor, please contact us.