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Most schools have failed miserably in educating students about personal finance. The task is then put on parents to teach their children.
Unfortunately, many adults never learned financial skills either and are unable to do so.
Maybe the system is built like this on purpose? When the general public doesn’t know how to manage their money, they’re more likely to overspend.
While that may be good for the economy, it isn’t great for people still living paycheck to paycheck.
It would be a different world if schools put more focus on financial literacy. If they did, many Americans wouldn’t have to learn the hard way.
Imagine how much better off people would be if they taught these five financial skills in school.
First and foremost, schools should teach students how to make a budget. It’s probably the most important financial skill a person can learn.
Schools teach us the skills to work a 9 to 5 job and earn money, but we are not taught how to manage it. This causes people to blindly spend their income.
Knowing how much cash is coming in and going out is crucial to prevent financial disasters.
A budget is a guide of how much you can and should spend according to your salary.
For whatever reason, people fear the word budget and associate it with poor people. That is actually the opposite. Wealthy people budget for every dollar while broke people don’t even think about it.
Did you ever learn what stocks are and how financial markets work in school? Most people will answer no to this question.
Besides some college courses, the subject is never taught or even discussed.
Investing is a long-term game, and the earlier you begin, the better. That is why it would be so beneficial to teach the subject to young children.
Instead, millions of Americans are clueless about the stock market and are even afraid of it.
The lack of education prevents people from investing and building their retirement funds.
Eventually, when people are in their mid 30’s to ’40s, they begin to realize the need for a retirement plan. By then, it is much more challenging to catch up and get a sufficient amount invested.
3. Avoiding Bad Debt
Avoiding bad debt is huge.
Millions of Americans are debt slaves, earning just enough to make their minimum payments.
Again, maybe this on purpose? The United States is a nation of debt, and central banks greatly benefit from it.
Indebtedness makes life much harder than it needs to be. Schools should warn of the consequences of debt and how to avoid it.
Millions of young adults fall into debt traps through auto loans, unaffordable homes, or unwise college plans.
When you are young, you should be working and earning as much as possible. Getting into debt at a young age stops you from investing and building your net worth.
4. Real Estate
Learning about real estate while your young is nearly as important as learning about stocks.
Although buying a home isn’t necessarily guaranteed to be a good investment. Real estate investing has created many millionaires and is a preferred stream of passive income.
Schools don’t discuss the factors that affect real estate prices or the benefits of owning property. This leads to poor decisions when deciding to rent or own.
Real estate is a valuable asset that takes substantial capital to acquire. Learning early on how to invest in it and how mortgages work would benefit many future adults.
5. Building Credit
Your credit health is a huge factor in life that is rarely discussed in school. Millions of people don’t understand how it works or how to improve their credit score.
Poor credit can prevent you from qualifying to buy a home, rent an apartment, get a car loan, and even a job.
It’s common for young adults to have bad credit or none at all. They graduate high school get into debt, miss payments, or just fear getting any type of loan. This could be easily remedied by basic financial education.
It’s such an important subject that it makes you wonder why it’s not taught in school.
There are several essential topics regarding personal finance. Sadly, almost all of them are not taught in our educational system.
At the very least, they should teach these five financial skills in school.
Gaining this knowledge early on will prevent a lot of money trouble down the road.