Out of the working crowd, 80% of the population would not know the different taxes that they pay and why tax is even necessary in the first place. Or how to open a new bank account and how to write a check. Most of them don’t even know what compound interest is, and that is what the finance knowledge is that our world is running on.
Why is it Important to Understand Finances?
Well, when you start earning, you have to start saving and enjoying at the same time. Knowing about your investment options and credit card finances would help you to plan for your future investments in a more efficient way.
Robert Kiyosaki once said that the rich teach their children how to read financial statements and the poor do not and he is right.
Most of us realize all this when we’ve made a thousand mistakes. Financial illiteracy is actually a really big problem. Because, if you have a society full of people buying things they can’t afford, retiring with no savings, getting sick and not being able to afford health care – our economy would start falling off, which is precisely the situation currently.
Students are Setup for Financial Failure With the Current Education System
Students are made to learn the names of the Mughal rulers when they should be taught about the taxes. The science textbooks aren’t revised from time to time and don’t cover the latest inventions and discoveries. Students are clueless about the practicality of the formulas they are bluntly made to memorize in high school.
With the world developing so fast in every aspect, our college degrees almost seem useless. Why should students be asked to do something computers are much better equipped to do? Why does the school and college curriculum not focus on practicals and experiments rather than memorizing long paragraphs of theories?
The current education system focuses on teaching rather than learning. Every year millions of students all around the world graduate, but there are just a few hundred maybe that actually use their knowledge productively in their lives and careers.
Learning Things From External Sources Isn’t Always Reliable Either
What is taught in the classrooms is forgotten and what should actually be taught is expected from the child to learn himself/herself over the course of time, or at home from their parents. Most of the times the students will learn these skills from people who aren’t good communicators because money talk is usually uncomfortable especially within the family, then that is a problem!
And this is the problem in most cases – students have incomplete knowledge about things which actually have an important effect on their lives. Like their parents, they too somehow drag their whole lives making innumerable mistakes and managing to find temporary solutions to their problems each time, pushing the actual problem into a corner.
These children will then pass on the same knowledge to their offsprings, now because they weren’t taught how to do it properly either, the cycle just continues. We go on creating adults who aren’t trained in some very basic fields, skills which are needed to be successful and live a happier life.
Financial skills are one of the most basic ones that adults need. Everything else is fueled by this. If you don’t know the basics of managing your finances you are most likely going to suffering in all the other areas. Which is why financial illiteracy is an important issue that needs to be tackled at the education level.