Have you used Pythagoras theorem? What about making a battery out of a potato? Hmm, us neither. It’s safe to say that the high school curriculum in the UK is varied, but there wasn’t much in the way of preparing students for their financial future.
Of course, high school has many merits and benefits that provide students with the skills to achieve success in their academic future. It’s also a place to make wonderful life-long memories, and in many cases, lasting friendships are forged over the five-plus years students typically attend.
However, if you think back to your time in high school, was there much emphasis placed on the real-life, ‘grown-up’ responsibilities that most adults encounter on a daily basis – especially, when it came to prepping us with the skills to successfully manage our personal finances? Here are some of the lessons, we could have done with knowing when we were in school:
Creating a Budget
I’m not sure there are many high schoolers who would jump for joy at learning how to budget their money, but it is one essential life skill that helps to prevent unnecessary debt.
If you don’t know how much you can afford to spend and save each month, it’s easy to fall into the trap of debt, especially with the appearance of Buy Now, Pay Later credit schemes.
Every student should be taught how to set up and manage a budget, which they will be able to carry with them through all of the financial events that life throws their way, from buying a car to saving for Christmas.
If you’d like to learn more, check out our blog post about the dangers of buy now pay later schemes and how they can impact your credit score.
The Importance of a Credit Score
Did you ever hear of a credit score when you were a young teenager? Nope. Us neither. But a good credit score is key when it comes to lending money at a reasonable rate of interest.
Having a good credit score is important in life if you want to eventually apply for a mortgage, buy a new car on finance or get a credit card. The worse your credit score, the less likely you’ll be able to access these types of product down the line.
Unfortunately, it’s very easy to impact your credit score, and a lot of people suffer into their adult life due to mistakes made as a young adult. Issues like not paying phone contracts off or missing payments on bills can lead to a reduction in score.
Okay, so this one may not exactly be “financial advice” so to speak, but there are 350,000 people who are currently struggling with a gambling addiction in the UK.
Living with a gambling addiction can be expensive and unfortunately, the number of gambling outlets in the UK has massively increased and although the government are trying to clamp down on this issue, there are still huge advertisements and sponsorship deals plastered across social media and television.
If the dangers of getting hooked on gambling were implemented in the high school curriculum, this could help to give children the skills and advice needed to avoid getting into problems when they’re at the legal gambling age.
The Benefit of Compound Interest
So, with the low-interest rates we’ve seen since the recession, this may not have sprung to mind when learning about finance. However, it’s important, nonetheless.
Compound interest is a way of making the most of your savings or investments. It’s where the interest is calculated based on the initial deposit, plus all the interest that you’ve received from previous periods.
Whilst not all high schoolers will reach their savings potential or maximum income for quite a few years when it comes to maximising your the key to saving money is – time. By starting early, you can reap the rewards sooner and help to build wealth that will compound over the years.
Laying the Groundwork for Managing Financial Milestones
Teaching kids about the importance of preparing for a secure financial future would help kids to be aware of what they’re expected to pay when they’re living independently.
Sure, there are things like the rent or mortgage, but what about paying council tax? Or dealing with home repairs? These aren’t often mentioned in a high school curriculum. Setting healthy financial goals will help students to see how much money they should be putting aside, how to avoid bad debt, and adjust their income to manage the cost of living.
Openly Talking About Financial Difficulties
When it comes to money, there seems to be a stigma attached to people who face financial hardship. People feel embarrassed about getting advice and support when they need it and often let debt build until it becomes too much.
We all make mistakes in life, especially when our finances are involved – and mistakes happen. Nobody is perfect, the key is how you deal with these mistakes which is where teaching children that it’s okay not to be, well, okay when it comes to money should be a priority and a normal part of the curriculum.
This could prevent individuals from digging themselves a financial hole later in life if they know that help is available when things don’t go as planned.
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