Financial lessons come in many forms, shaped by each person’s understanding and experience. Regardless of how the knowledge sets in, learning about money doesn’t cease during a lifetime, as financial responsibilities and awareness continually shift, leading to new revelations. Although it’s a unique path for each individual, effective personal financial management is built upon a set of basic monetary principles, governing cash flow, savings, investments and other household concerns.
According to some observers, young Britons are not getting adequate exposure to the financial basics needed for lifelong success managing money.
Setting Unrealistic Expectations
Young people are more connected than ever before, using social media and technology to follow their favorite celebrities and personalities. In many cases, the process exposes them to extravagant lifestyles and lavish spending. Is the barrage of information actually creating unrealistic expectations among young people, setting them up for future failures?
A strong case can be made that “generation debt” is taking away the wrong messages. And what’s more, schools may not be doing their part furnishing enough real life financial lessons to temper the excessive spending lifestyles kids are accustomed to seeing on the telly and through other media channels.
It appears reality TV and other influences are placing too much financial pressure on young people. A recent study undertaken by the Personal Finance Education Group shows that even as kids feel pressure to keep up with extravagance seen across society, education about money is lagging. The Ticking Time Bomb of Generation Debt, as the study is called, found many secondary schools are not adhering to 2014 changes made to the national curriculum. The result for students awash with grand financial visions includes unrealistic beliefs about money and the potential for falling into problematic debt.
According to teachers taking part in the research, media advertising and TV programming lead kids to the wrong conclusions about money, as they watch shows pushing them to accept only the best life has to offer – regardless of the cost.
Changes introduced to the “citizenship” component of the national curriculum in 2014 are aimed at giving young people the tools needed to effectively manage day-to-day spending decisions and plan their financial futures. The Generation Debt study found students are instead opening store cards and adding debt, falling prey to a trend targeting older students for cards, phone tariffs, and download charges. Despite the changes, it is thought the level of education about money remains lower than expected, with only about 40 per cent of schools passing-on the proper financial lessons.
The Value of a Solid Foundation
Facing so much pressure from outside influences, it is more important than ever for youngsters to get a grip on finance basics. In fact, students under the age of 18 have expressed a desire to learn more about loans, interest, mortgages, and other financial matters. Some observers have identified lack of teacher training and comfort handling financial lessons as possible contributing causes to lagging performance in this important area. Whatever’s to blame, there are plenty of reasons for young people to build a strong financial foundation.
Mastering Terminology – Speaking the language of personal finance is the first step toward understanding complex monetary concepts. Unfortunately, without instruction aimed at basic finance principles, the terminology itself can be an obstacle for young money managers navigating unfamiliar territory. An essential understanding of the language, on the other hand, gives young people a better chance of figuring out financial challenges as they arise.
Managing Debt and Investments – Understanding interest rates and financing rules for mortgages, alternative borrowing options without credit checks, and revolving credit opportunities are only a few of the benefits of early financial education. Making and managing investments for the future is another key component of effective money management, which can falter without proper financial understanding.
Using Time to Your Advantage – Compounding returns is the best way to get ahead, saving money and growing investments. Lacking formal financial understanding, young people may wait until later in life to get started saving for a house or preparing for retirement. The costly strategy can result in missed opportunities, getting ahead. And failure to start saving early may make it harder to step away from the work force at pension age.
Financial education not only manages expectations among young people, but learning about money also equips kids with the tools needed to make prudent financial decisions, later in life. With the right lessons integrated into the national curriculum and teachers trained to share them with students, the financial future looks bright for young Britons. Without a comprehensive approach to financial instruction, however, British kids may be at risk, managing money and making the most of financial opportunities.