Why should Financial Literacy be a part of school curriculum?

By Tracy Cardoz

It’s common knowledge that children absorb a lot from their surroundings, be it responding in social situations, reacting to strong emotions, or mimicking others’ behavioural patterns; all of this is inevitable. It’s no surprise that parents and teachers consciously encourage good values and qualities among children.

Parents always want to imbibe good qualities among their children, some of which may include greetings, appropriate social responses, building patience, respectful behaviour towards people of all ages, and more. While teaching children these soft skills definitely go a long way, there are some real-life skills that they need exposure to from a young age.

One of the core life skills that could be resourceful for children to thrive in a competitive environment is financial literacy. The basics of the subject largely contribute to the financial capabilities of a consumer. Financially literate consumers better understand how to manage their resources and make well-informed financial decisions. In the long run, it will contribute to increasing economic security among the youth.

The head of the Technical Group on Financial Inclusion and Financial Literacy (TGFIFL) – the deputy governor, Reserve Bank of India (RBI) released the document – The National Strategy for Financial Education (NSFE): 2020-2025. The said document focuses on financial education across the nation with a vision to create financially aware and empowered India.

The NSFE 2020-2025 strategy includes a ‘5Cs’ approach that categorises the dissemination of financial education through emphasis on Content, Capacity, Community, Communication, and Collaboration. The Content approach includes developing relevant content and including it in the curriculum of schools, colleges, and training establishments.

To help build a strong foundation of a young adult’s relationship with money, it is imperative to introduce the concept of managing finances at the right age. Therefore, many studies recommend including financial literacy to the curriculum. Introducing the concept of money management at an early age can help children prioritise their purchases, inculcating a habit of spending money in a balanced manner.

This essential life skill shapes the way children deal with financial management in their adult years. The earlier one starts, the better are their chances at being successful in the future. The best way to consciously inculcate the basics of handling finance would be through making it a part of their day-to-day life.

The idea is to develop the habit of making reasonable decisions about matters that involve money. The cognitive understanding of financial components could invariably help children make well-informed decisions and encourage financially responsible behaviour in the future.

There are myriad benefits, short as well as long term, of introducing financial literacy as part of their curriculum. Let’s take a look at some;

-Gives a sense of responsibility
-Helps effectively manage monthly allowances
-Develops reasonable spending habits
-Understands value of money
-May responsibly handle student loan
-Gets better at scouting career options
-Optimally handle personal finances as an adult
-Responsibly handle debt

National Payments Corporation of India (NPCI) in collaboration with Central Board of Secondary Education (CBSE) launched an exclusive Financial Literacy textbook for grade six in June 2021. The objective was to introduce students to the basics of financial concepts at a preliminary stage of their education. The book entails critical topics like Banking, Security, and modes of Digital Payments, among others.

In Denmark, financial education is mandatory for 7th through 9th grade; Canada has The National Research Plan for Financial Literacy in place to address the declining financial literacy; The UK mandated personal finance instruction in schools; and Australia has adapted the MoneySmart Teaching Programme for teachers. These countries have a higher financial literacy rate of about 65%, on the contrary, South Asian countries have substantially low financial literacy scores. If India is to become an economic power-house, it would be prudent to invest in financial literacy programmes as a part of school curriculum.

The author of this article is director of education, Square Panda India.

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