The ability to understand money – or lack thereof – affects quality of life, opportunities we can pursue, our sense of security, and the overall economic health of our society.
I doubt many parents would disagree with the concept of their child learning the complexities of money-driven products at school. After all, the better they are prepared for the transition from school to university to life, the more likely they are to succeed. And that’s what we want for all our children.
Here are 10 financial essentials we think children should learn at school
- The Basics: Primary school kids need to be taught the nature and functions of money, as appropriate to their ages. Saving pocket money, depositing it into their own bank savings account and knowing how much they will need in order to buy that something special are financial fundamentals.
- Budgeting: As the kids move up through primary school, they should be well versed on creating personal budgets. With the added maturity of age, they will want to spend on the latest gadget, or whatever takes their fancy. That’s where a budget shows them exactly what it will take for them to be able to afford that item.
- Saving: Directly related to budgeting, putting a certain amount of money away regularly will see the ‘goal’ amount being reached within a defined time frame.
- Compound interest: How this differs from simple interest can be either a friend or foe, depending on whether it applies to a savings or loan account. The formula for calculating compound interest will aid overall financial literacy now and into the future.
- Debit/credit: The trap with card convenience is that it effectively ‘hides’ money. Admittedly, with a debit card, you can only spend what you have but with a credit card, the temptation is always there to spend more than you can afford. Showing kids how long it will take to pay off a credit card by paying only the monthly minimum required is an eye opener. So too are the practicalities of banking and shopping online.
- Mobile phones: A must-have in today’s society, teaching kids (from, say, Year 7 upwards) about how to shop for a mobile phone is essential. Comparing contracts and plans to decide which one is right for each individual shows kids exactly what they have signed up for.
- Mobile phone security: There is a reaction to every action and high school kids need to learn what’s likely to happen if they SMS a vote for a TV show contestant, or give away personal data by entering a competition lured by ‘amazing’ prizes. A sudden flux of spam may well be the result. Subscribing to a dodgy app is likely to steal data, too. And there can also be disastrous consequences of leaving a mobile unattended in a public place.
- Consumer rights: Your rights under New Zealand consumer law should be well understood in relation to purchasing or using a product. This can often require a degree of confidence when negotiating with the appropriate body or person, as some are ‘unhelpful’, particularly to the young! School kids who learn the complexities of money each year are likely to be more savvy in this situation.
- Advertising: Dissecting advertising strategies, as they apply to purchasing/leasing products or services, opens up new understanding for stu dents on commonly-used ‘persuasion’ techniques. This helps them make more informed choices, rather than buying on impulse or as a result of hard sell techniques which may not be the right thing for them in the long run.
- Kiwisaver: As soon as teenagers start a job, they have the option to sign up for Kiwisaver. Kids need to have a good grasp of what Kiwisaver is and what their options are in regard to these types of accounts. Many adults can find Kiwisaver confusing so competence in this area by kids having a head start will pay off big time down the track.
The ten money issues above are only scratching at the surface. Demonstrations of the use and abuse of a range of banking products, moving out of home, getting a first job, running a business, understanding investment and the different levels of risk it poses are just some of the other topics that come to mind as useful additions to the financial literacy school curricula. Let’s hope we see some coordinated action sooner rather than later.