Many young people are leaving school without a basic understanding of how personal finances ought to be managed in the adult world. This shortcoming is due to a lack of life experience and limited education, and they can be overcome in two simple ways.
The main reason why so many school leavers are unable to handle their own finances is that they have been living with their parents for free. As a result, they have never had to earn or save money in order to pay bills. Another cause is that personal financial planning is only rarely part of the school curriculum. Schools focus instead over classical subjects, such as math, science and languages, which mean important life skills, are not being taught. Thus, both teachers and parents are failing to prepare young people for the real world.
There are two options for solving young people’s inability to plan personal finances. Firstly parents should spend time with their children teaching them how is money earned, budgeted and used for either savings or expenses. One simple step could be for parents to start teaching young children how to manage their pocket money and, as their child grows up, expand into more serious household expenses. Secondly, the schools should incorporate life skills into their final year curriculum. In this way, children will be able to learn in supportive environment how their finances need to be budgeted and dealt with in order to avoid debt problems later in life.
In conclusion, young people lack of financial management skills due to the negligence of parents and schools, what can only be solved if both take more responsibility to equip school leavers with the right skills.