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6 Reasons Why Financial Education Is Important In Schools

“There’s been a notable increase in the number of people under age 35 who have declared bankruptcy.” says reuters.

“Debt among us, young Malaysians are going bankrupt.” AKPK wrote.

“The bankrupts are getting younger and its not because of an unsuccessful business but because of over spending and not making the right financial choices from the start. The importance of financial education has been completely ignored in schools. But Why? Parents and students have to take this matter onto their own hands.” says Mr Sai Mun.


With the growing problem of poor financial management, it’s not unreasonable to postulate that these issues, when broken down, lead to the core problem of why the one third of the modern generation do not have proper access to financial knowledge: education. Always education, and despite financial literacy being a skill so widely required in everyday life, the state certainly hasn’t implemented necessary measures to ensure that financial education is mandated in the classroom, due to justifications like lack of time,


lack of state curriculum requirements and lack of demand… or so they say. The faculty of education may be competent in whatever they specialize in and teach, but finance remains an unfamiliar subject they find too daunting to take on. Which brings back to the point of why it’s necessary to start emphasizing the importance of financial education in classrooms to prepare this generation and the next, and here is a list of core advantages of the financially knowledgeable, all correlated like the study of economics is, and why things need to change.

1) Financial literacy matters in decision-making.

This is what most economists would place emphasis on, as every single one of us, people, institutions and society make economical choices under conditions of scarcity, all beginning from the very moment we rise to greet the waking world. Do we sleep in and skip work? That certainly saves up grocery expenses when you forego brushing you teeth for enough mornings and neglect breakfast. The air conditioner goes on longer then though, along with the money you begrudgingly pay to the electricity suppliers. Let’s not forget how it compromises your paycheck, also the general relationship with that temperamental boss who probably forgets what a human fault sleeping in is, the monster. Worst comes to worst, you’re suspended and left without economical income for the month or more; how will you pay for rent? All details that don’t stand out as we’re hustled along the business of life, but perhaps with that basis of understanding now, we’ll be more aware than ever of how we spend and what we spend on, what short-term gratifications can be afforded if it isn’t doesn’t compromise long-term financial welfare. Decisions happen all the time, and it’s preferable to make the right ones, because…

2) … personal financial decisions affect your quality of life! 

It’s no joking matter to say that personal financial decisions of daily life can drastically affect our standard of living, and the aforementioned examples with sleeping in on a work day and skipping breakfasts are but a meager example as to how tangible matters are when it comes to economical decisions. Every decision not only impacts the weight of your wallet, it goes beyond that, affecting the state, nation, world as it all circulates and stays interrelated, as one person’s economical decisions affect the nation, and one nation’s overall balance of payments affect another’s, thus the lives of those who live there. Being financially educated allows us insight into how the world function, and how to be careful to seize golden opportunities as the fluctuations of economy are speculated with a trained eye. An example would be predicting upcoming inflations, as being able to form good inferences and knowing when inflation is happening could minimize losses or maximize profits in the stock market. Knowledge grants the luxury of preparation, and that could be make all the difference in preventing losses or improving one’s quality of life to heights never before known.

3) Improved budgeting skills.

Budgeting is a healthy practice in case of overspending or when an economical crisis like inflations or currency devaluation strikes. With proper rationing and cost-effective ways devised, people in general learn to adapt to their budgeting behavior whenever prompted with a variety of financial scenarios and act in a way that’s financially responsible, such as seeing that more crucial priorities like insurance and savings are fulfilled before expending all monetary resources in casinos of Las Vegas. This is especially the case with young adults who spend on a whim of satisfaction without much regard for affordability and long-term savings, though it does not necessarily pertain to that age group only as adults that are already adjusted to a working life make that mistake too. In fact, it is statistically proven that 30% of retired individuals do not have a saving account, and one can imagine what kind of retirement plan that’ll be. So create a reasonable budget and stick to it unless you have extra to spare, and even then they shouldn’t be exhausted in a day. We’re watching you, Starbucks-enthusiasts, lay off the macchiato until the next paycheck.

4) Financial scams 

This is more or less related to the aforementioned comparison of “how much we know, and how much we think we know” towards the fundamentals of financial knowledge. Relying on a survey conducted by the National Bureau of Economic Research wherein individuals are asked to rate their own financial knowledge, it is perhaps of no grand surprise to find out that the majority of individuals give themselves high ratings of being financially savvy and equipped with adequate information even when results may show otherwise. This is an evident portrayal of gulf between actual knowledge and self-assessed knowledge, and one finding stands out in the analysis: Apart from low debt literacy amongst women that give themselves low ratings when assessing their own financial knowledge in the questions, the elderly respondent s rank the lowest in terms of actual financial knowledge despite offering highest ratings in actual financial knowledge. Which may just explain the ongoing prevalence of financial scams perpetrated against the elderly whom are deemed gullible, and as a general prevention measure, those who are financially educated can protect themselves and those around them against such deceitful monetary extortion better than most.

5) It doesn’t stop at saving. 

Why stop there? Being financially educated doesn’t limit anyone to just saving up in case of a rainy day, as those who are economically savvy tend to pursue means to generate more income effectively in the form of making the right investments and purchasing the profitable stocks. And while some may argue that money cannot be brought to the grave…

6) Retirement pays off. 

Still, with pensions, it is known that those who plan tend to come out with twice the wealth as those who do not. With the basis of saving and portfolio-choice decisions, such as interest compounding, inflation and risk diversification, the life of retirement may not look as daunting a prospect as it was before and one can learn to truly enjoy whatever life can provide at its fullest once they’ve worked their due.

To conclude matters. 

The public may claim to understand its importance of financial management as evidenced by how it’s required everything in life from the angle of domesticity where expenses and child education has to be planned, and business-wise where cash flow forecasting may just affect this year’s revenue compared to the last, or even the fate of the company—but do they do it effectively? And can the fundamentals of financial responsibility be properly instilled to children by their parents when they have to balance between obligations and commitments, granted if they are financially knowledgeable themselves? How much we know, and how much we think we know can make for rather drastic comparisons in results, and the general public should have access to such management skills through education so that nations can grow more progressively, and society moves forward as a whole.

Kairon, with years spent dabbling in freelance writing, maintains a personal philosophy that puts key emphasis on the understanding of interpersonal relationships to reach a holistically progressive society. It all begins with the empowerment of the mind, with one metaphorical dissection of human elements at a time. 

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