Teaching Financial Literacy in Classrooms

How many young students recognise the distinction between a credit and a debit card?

Certainly, some do, but the overwhelming majority have a different story to tell. A credit card appears to be free money to those who lack financial knowledge. And besides, the user may take it wherever and swipe it for a transaction up to a specific amount without any immediate repercussions. The only thing that happens is that a receipt with some digits appears. Isn’t it truly the case that if you pay the minimal payment each month, nothing catastrophic will occur? Probably. However in reality, credit cards contain exorbitant interest rates, causing the amount to grow and grow until even the minimal monthly payment becomes impossible to pay. How are young students who are just commencing  in the workforce expected to know this?

In the real world, financial literacy is essential. Financial literacy is characterised by effective financial planning, debt management, correct interest calculation, and a knowledge of the time worth of money. There are so many delightful milestones that accompany with being an adult and becoming independent, but none of them entail paying taxes, negotiating interest rates, setting up bank accounts etc. At the age of 18, children plunge into an environment where their financial planning abilities and knowledge have a direct influence on each and every step they take from graduation to retirement. Financing plays a massive role in all of these major life events: choosing a career, purchasing your first home, getting married, having children, etc.

Students in India learn to tackle hard arithmetic problems, create breakthrough technology, and find novel cures. They also study economics, business, politics, geography, etc. The goal of education is to prepare a student for the tomorrow, yet the curriculum in universities and schools is not linked with the needs of the actual world. Our educational system caters to creating professionals who earn well but lack financial knowledge. When these recent grads start work, they are easy targets for con artists and unethical distributors. To add to the doubts, many families are sceptics when it comes to issues such as growing money, prudent investment, and company ownership. A lack of basic understanding leads to bankruptcies, a loss in income, bad investment ideas, or a savings account that is too difficult to manage. According to a worldwide study done by Standard and Poor Financial Services LLC, India, 76% of the nation’s adult population does not comprehend fundamental financial concepts. India has the lowest financial literacy percentage compared to other major rising economies. A lack of formal training and knowledge as well as state-to-state variances are to blame for this situation. Over 95 percent of Indian families chose to retain their money in bank accounts, as per a poll published by SEBI in 2017. Fixed deposits were most popular investment option, trailed by life insurance plans, precious metals, post office savings, and mutual funds. Only 9.7% of those polled own mutual funds, while 8.1 percent own equities. A detrimental lack of financial literacy is evident in India, as seen by the facts presented above.

Robert Kiyosaki rightly says, “Academic qualifications are important and so is financial education. They’re both important and the schools are forgetting one of them.”

Financial literacy has long been relegated to a secondary role in a curriculum geared at creating boring machines whose end result is earning money. Because of the tremendous changes in the financial environment over the last few years, it’s critical that we incorporate financial literacy into school curriculums inorder to equip students with the information they need to live within their means. As a result of the COVID-19 pandemic, there is a light on the  pressing need for early financial literacy.  Because of the health problem, families are finally realizing that this is something their kids should learn. Mathematics begins with counting and progresses to addition and subtraction before moving on to multiplication, subtraction, division and fractions. It is necessary to master the alphabet before reading. Similarly building financial abilities involves practice and years to progressively acquire bits and pieces of information, much as learning a language or new talents does. Each school year, students should be taught age-appropriate themes in personal financial education. That’s why it’s essential to start teaching financial literacy at a young age so that it can be rewarded later on. It is a good option to arrange financial management courses in such a manner that they instill the proper money habits and attitudes. Budgeting, saving, and investing can all be included in the money management curriculum. Children need to learn how to make the most use of available resources and how to discern between wants and necessities.

Early exposure to personal financial and money management abilities opens up a world of possibilities for real-life application. Just imagine about how much of a head start an individual will have in life if they  already budget frequently, save regularly and spend sensibly. As a result of generating income without knowing how to handle it, one is more likely to make poor financial decisions.  There is a risk that this will lead to little or no savings, or even worse debt. Parents are more likely to teach their children the basics of financial planning. Parental influence, on the other hand, is more likely to favour conventional types of investment such as gold , bank deposits, real estate etc. Bank deposits are perfectly fine, but they do run the risk of depreciating in value over time due to inflation. If students are  educated on financial literacy at school, not only will they be able to make better financial decisions, but they will also have influence on better investment for their parents .Because right now how many students are actually aware of what to look out for while applying for a loan and how to perform an online transaction without succumbing to phishing scams? They have no concept of mutual funds, stocks, or insurance policies.

The finest aspect of studying and investing as a youngster is the opportunity you allow your wealth to multiply over a period of several years. This also helps anyone build a good corpus by the point an individual is in his or her mid-twenties and perhaps more significantly – gives one the conviction that someone can develop a corpus by beginning to invest at any life stage. A health emergency, such as a tragic accident or a life-threatening disease, may often drive families on the verge of poverty. Students who have been taught  financial literacy in class may be able to assist their families in obtaining a good health insurance plan or may be able to do it themselves when they reach adulthood. Segments of society that have traditionally been disadvantaged and impoverished can transform both economic and social fortunes around in a generation if their children are taught financial literacy. This has the potential to significantly reduce poverty rates in a short period of time.

By beginning young, it is likely to manipulate the mentality of the younger generation about money and provide them the opportunity to be debt-free and financially independent. Human capital building begins with financial literacy. In addition to raising the standard of life, financial skills will also add to the overall growth the country. It is possible to eradicate poverty to some extent with financial literacy. For all intents and purposes, an economically intelligent India would be a big power on a global scale.

– Uttara Jantwal

Picture Credits:


“Why Financial Literacy Should Be Imparted in Schools’, The New Indian Express, 26 March 2018

“Indian Schools Need to Impart Financial Literacy”, Freedom Gazette, 2019-02

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