Understanding money is crucial for a successful life.
Yet, many schools don't teach financial literacy, which is vital for managing personal finances and building wealth. Learning about money from a young age can have a significant impact on a person's future. Here are some takeaways from a recent CNBC article on how children from wealthy families learn about money.
Learning from the Best
At Institut auf dem Rosenberg, a top boarding school in Switzerland, students aged 12-18 learn about wealth creation, philanthropy, family businesses, and succession management. They manage hypothetical $1 million portfolios and discuss investments with a mock family office board. This practical approach helps students understand various investments, risks, and the power of compounding interest.
Bridging the Gap in Financial Education
In the U.S., more states are now requiring high school students to take personal finance courses. Research shows that taking a financial education class can benefit students by about $100,000 over their lifetime. This comes from avoiding high-interest debt and getting better borrowing rates for big expenses like loans and mortgages.
Engaging Young Minds
Students are often most interested in investing and building wealth. By focusing on these topics, teachers can keep students engaged and excited about learning. Financial education should cover not just investing but also budgeting, banking, paying for college, taxes, credit management, and the psychology of money. As Yanely Espinal, Next Gen’s director of educational outreach, points out, "Hook them where they are most interested." By focusing on the aspects of finance that resonate most with students, educators can create a more engaging and effective learning experience.
Long-Term Benefits
Studies show that students who learn about finance are better at managing money as adults. They are more likely to get lower-cost loans for college, avoid high-interest debt, and have better credit scores. Financially literate adults can manage monthly expenses better, make timely loan payments, save more, and plan for retirement. For instance, a study by the Brookings Institution in 2018 found that teenage financial literacy is positively correlated with asset accumulation and net worth by age 25.
Moreover, adults with greater financial literacy are more likely to manage monthly expenses effectively, make timely loan payments, avoid excessive debt, and save and plan for retirement. This underscores the lifelong benefits of starting financial education early.
Conclusion
Teaching financial literacy from a young age is essential. It provides kids with the tools they need to manage money wisely and build wealth. By making financial education a priority, we can help future generations achieve financial stability and success. Let's give our children the knowledge they need to succeed in life by including financial literacy in their education. As Bernhard Gademann of Institut auf dem Rosenberg aptly puts it, "Not being able to provide students with this information and training is really stealing an opportunity for them being successful." Let’s ensure our children are equipped with the financial knowledge to thrive.
