More schools are starting to make personal finance education a required class, but this needs to be a requirement for every student, as personal finance can greatly shape and change your life.
After all, the majority of people don’t even have a basic understanding of personal finance and/or their financial situation. While there are many great classes that are required in school, personal finance should be equally important.
Here are 5 classes that we think should be in the school curriculum.
1. Personal Finance
When you stop to think about it, why was algebra a required subject in high school, but learning how to manage personal finances wasn’t even on the school’s radar screen?
Without a doubt, algebra teaches basic logic, but so does creating a budget and learning how to stick to it. And although algebra might help getting into college, knowing the ins and outs of their personal finances can actually help students stay in college.
Adding courses in personal financial management to a high school’s curriculum has the potential to ease the transition into adulthood regardless of which direction a student’s life may take.
Accounting gets a bad rap, but it’s an incredibly useful subject to learn. Plus, it’s not as complicated as you might think!
With some accounting knowledge under their belt, kids will gain a much deeper understanding of what goes on with their own finances in the future and learn important skills like how to effectively track expenses and work within a budget.
Many people use the excuse that they are “no good at math” to explain their reluctance to study accounting, but the math actually involved is quite basic. If you can add and subtract, multiply and divide, you are set! With your new savings savvy, maybe you can save up enough to send your parents on a cruise as a thank you for the many years they supplemented your meager earnings!
3. How credit cards and loans work.
Teaching children the fundamentals of credit, finance and money management is crucial for their success and also helps them to develop mathematical and problem-solving skills. By adopting responsible financial practices as a child, the more likely one will have a good credit score when they are older.
While many college students are targeted for credit card offers, chances are high that they lack the knowledge on how to use credit cards successfully. They often view them as extra money instead of as a tool. That’s because they likely weren’t taught it in high school.
Learning how to build credit and increase your credit score are basic financial skills. A good credit score can help you rent an apartment, qualify for lower interest rates on a mortgage or car loan, or even pay less for car insurance, so it’s important to manage your credit from the time you graduate high school and throughout college and beyond.
4. Managing a budget
While budgets may not be glamorous, everyone should know how to properly create and manage one.
Different things work for different people, but the key things to know are:
How much money you’re bringing in.
How much you’re spending.
Whether or not you are being wasteful.
Knowing how to manage a budget, even at a young age, is important because a budget can keep you mindful of your income and expenses. By having a budget, a person knows exactly how much they can spend in a category each month, how much they have to work with, what spending areas they need to work on, and so on.
A budget can help you to reach your goals, pay off debt, make more money, retire, reach financial freedom, and more.
5. How to invest.
Kids should learn how to invest so that they can:
- Prepare for the future.
- Allow their money to grow over time.
Many people are afraid to invest their money, mostly because they were never once taught or told about how important it is to invest. Many people probably don’t even know how to take the first step to investing their money.
If people are never taught those two very basic things, then they may never invest!
Investing is important because it means you are making your money work for you. If you weren’t investing, your money would just be sitting there and not earning a thing.
Every high school is different and will have its own class choices, but it will serve your child well if you do a little investigating to see if their school offers any of the above classes. And if so, talk to the child’s counselor to make sure they are taking full advantage of these opportunities.
If you have aspirations of your child following your footsteps into a FIRE or REI world (and I assume you are partaking in those strategies if you find yourself reading the BiggerPockets Blog), these classes will set them up for their best life.
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