Financial Literacy for Students – Money Understanding That Can Change Your Life
In today’s time, as important as education is, money understanding is equally important. We call it financial literacy in English. It means learning to earn, spend, save and grow money in the right way.
Often we see that many people are worried about money even after studying well. The reason is not that they do not earn money, but that they do not know how to manage money properly. If children are given money understanding from a young age, they can grow up to live a more sensible, self-reliant and secure life.
Why is it important to give money understanding to children and youth?
- Habits are formed at a young age – just as children learn to speak, walk or learn good values from home, similarly money understanding can also be given from a young age.
- Future decisions are easy – like college education, first job, buying a house or starting a business – money plays an important role in all these decisions.
- Money is not just something to spend – it is a means by which we can fulfill our needs and dreams. If it is not given the right direction, it can become a cause of trouble.
What concepts should be taught to students?
1. Earning and income – Where does money come from?
For younger children – explain to them that money does not come easily. For example, if they get pocket money, it is for doing some work. For example, watering the plants at home, keeping the room clean or concentrating on studies.
For older children and youth – explain the concepts of job and employment. Such as salary, wages, overtime and tax deduction system.
Example: If a student gets Rs 500 pocket money and from that he has to spend Rs 50 on mobile recharge, then it will be easy to explain that taxes and expenses are already deducted from the salary of adults too.
2. Saving and investment – How to save and increase money?
Savings – Teach children that if they save Rs 10 daily, they can save Rs 300 a month and Rs 3600 a year. Give them small goals, like buying a toy or buying a new bag.
Investment – This is a slightly bigger concept. It can be explained like planting a tree. Just like a tree grows slowly by sowing a seed and watering it, the invested money grows slowly.
Example: Investing Rs 1000 in the bank gives a little interest every year. If the same money is invested in the stock market or mutual funds for a long time, it can grow even more.
3. Budgeting – Planning expenses
Budget means deciding where the money will be spent and how much will be saved.
- Difference between needs and wants – Teach children that needs and wants are different things.
Needs like – books, uniforms, study material.
Desires like new video games, branded shoes, expensive gifts.
- Tracking – Children can write their pocket money in a diary or use a mobile app.
Example: If a student has Rs 1000 in pocket money, he can spend Rs 500 on essentials, Rs 300 on desires and Rs 200 in savings. This is the 50/30/20 rule.
4. Credit and debt – understanding borrowing
- What is credit? – It is borrowed money which has to be returned with interest.
- Spending responsibly – Tell children that taking a credit card or loan is not a bad thing, but if not repaid on time, the interest can increase a lot.
- Credit score – Older children can be explained that having a good credit score makes it easy to get a home, car or business loan in the future.
Example: Suppose someone borrowed Rs 500 from a friend and returned it on time, then the trust remains. But if you borrow money repeatedly and do not return it, then no one will be ready to lend money next time.
5. Banking – Basic things related to bank
- Types of bank accounts – Explain to children that savings account is for saving money and current account is for business people.
- ATM and online banking – Give practical experience to older children. Take them to the bank and open an account or let them withdraw money from ATM.
6. Risk management – Safety of money
- Insurance – Explain to children in simple language that insurance is like a safety shield. For example, if someone falls ill, health insurance takes care of the expenses.
- Avoiding fraud and cheating – Online frauds have become common nowadays. Tell children never to give password, OTP or PIN to anyone.
Example: If someone calls and says “You have won a prize, tell me the OTP” – then it is fraud. It is important to alert children about such matters.
Ways to teach financial literacy
1. Start early
Just like children learn to solve simple math problems, the basics of money can be taught early.
2. Connect to real life
- Take them to the grocery store and show them how money is spent.
- Involve children when budgeting for family trips.
3. Make it fun and interactive
- Play money games, like “Monopoly.”
- Keep track of spending and savings with mobile apps or online tools.
4. Set an example
Children learn what their parents do. If you spend wisely and save regularly, your children will do the same.
5. Integrate with other subjects
- Make a budget in math class.
- Explain economics in social studies.
- Discuss topics related to money in literature books.
6. Consult experts
Invite a banker or financial expert to the school to talk to the children.
7. Teach patience and planning
Encourage children to save money and buy big things instead of spending immediately. This will develop patience and future thinking in them.
Conclusion
Financial literacy is not only important when one grows up. If children are taught from a young age how to earn money, spend it, save it and invest it in the right place, they will grow up to be more self-reliant and wise.
This education will help them throughout their life – whether it is a job, starting a business or running a family.
Remember, managing money is not just about becoming rich, but about living a safe and balanced life. The sooner children learn this, the easier and happier their life will be.
