In various nations, young people graduate from high school with limited practical knowledge of personal finance management skills. This issue stems from certain factors, but proactive steps can be taken by governments and organizations to help address it.
First and foremost, there are several key factors contributing to this trend. The primary one is the absence of personal finance programs in the educational curriculum. In numerous countries, schools tend to place excessive emphasis on conventional academic subjects because of their perceived significance, thereby neglecting practical life skills. This imbalance between theoretical and practical knowledge covered in the compulsory programs leaves students ill-prepared for financial management, which often leads to costly mistakes when they first control their personal budget independently. Another problem is the lack of hands-on budgeting practice opportunities in daily life. That is, pocket money is given to children without any burden or financial accountability, while major expenses are handled by adults. Upon reaching adulthood, these individuals then struggle to manage and prioritise spending on certain aspects effectively. It is therefore increasingly common for young individuals to overspend on non-essential items and face shortages for basic necessities.
Regarding the seriousness of this situation, it is crucial that governments and organizations implement certain measures towards solving the issue. One approach is to mandate personal finance as a core subject in the national curriculum with one to two periods per week. For instance, students can acquire knowledge of budgeting, saving, interest rates and basic investing. This has been applied in several developed countries, namely the US or Canada, and has yielded positive outcomes. This way, students can graduate with a more solid financial foundation, helping them avoid the risk of common financial pitfalls in future occasions. Another action that can be taken by schools is to implement hands-on projects where students gain practical experience in real situations requiring budget management. For instance, by organizing school events such as proms or club fairs, students get the opportunity to directly plan and track expenses, which instills a sense of financial responsibility as they must allocate costs wisely in every area. Individuals are then provided with real-world budgeting experience from day one as they become financially independent.
In conclusion, despite the multiple reasons leaving students with little to no financial literacy, targeted measures from governments and schools can effectively address the issue.