This video is a fantastic TED talk on finance, and helps to demonstrate a novel way of teaching children about managing their money. But what topics should be taught?
I think that the topics should cover 3 different areas:
- Budgeting and Spending Plans
- Taking Out Loans
- Investing Money
Let’s go over each one at a time.
Teaching Budgeting and Spending
Learning how to manage their finances to prevent over spending is one of the most valuable life lessons for a child. If they can consistently spend less than they earn, then they will become very rich, and enjoy financial freedom into their later years.
One of the ways in which this could be taught in a classroom is through saving up “credits” for extra classroom related benefits, and teach the value of delayed gratification.
Educating About Loans of All Sizes
Every single child (unless they become a traveler) will have to take out a loan during their lifetime. Whether it’s a mortgage to purchase their first house, or a loan when they want to buy a car, the borrowing process is complicated and so children must be educated early on to stop bad decisions in later life.
One of the ways in which they can be educated is through scenarios in school, such as pretending to be banks and loan applicants, and talking about ideas such as risk. It can be helpful to compare all types of loans in these scenarios, and as such you can compare small loans at the Best Loans’ website here.
Investing Information In Schools
One of the areas that you will never encounter until you hit a University level business school is the idea of investing your money. Most schools are geared towards teaching people to follow orders and become employees, when in reality to provide a broader experience they should also be taught about being financially free.
The topics of investing can also inspire children to dream bigger than just a good salary or a respective career.