Why Financial Literacy is Important For Kids
Encouraging our students to be well-rounded, lifelong learners is central to our educational mission at Las Vegas Day School. In addition to a traditional, core curriculum, we believe a rich education is the best way to set our students up for success. To further prepare them, we also offer a course in financial literacy to provide students with essential knowledge that many students miss out on, often to their detriment.
What Is Financial Literacy?
At its simplest, financial literacy means understanding personal financial resources and being able to apply that knowledge to make responsible financial decisions. In a broader sense, financial literacy involves learning about everything from different types of bank accounts to understanding how interest works, to setting savings or investment goals and everything in-between.
While there is always more to learn, our curriculum focuses on many fundamental financial topics such as:
1. Personal finances
2. Banks and other financial institutions
3. Managing credit and money
4. Setting financial goals
5. Creating budgets and financial plans
Why Is Financial Literacy Important?
In today’s world of easy credit, online shopping, rising inflation, and a quickly-changing financial landscape, being able to plan and manage money wisely from a young age is a vital part of future financial stability. A recent survey of millennials indicates generally weak financial literacy and poor financial preparedness. According to the survey, fewer than 20% could correctly answer questions about basic financial concepts, and nearly half reported using such poor choices as payday lenders and pawnshops. Recent problems, such as the 2008 subprime mortgage crisis, which was made worse by so many homeowners failing to understand the terms and consequences of their mortgages, highlight the need for better instruction in financial literacy.
Important reasons to encourage financial literacy include:
1. “Invisible” Money — From online shopping to paychecks, so much of how we spend money involves purely electronic transactions rather than cash, making it harder to have a feel for how much is being spent, and making it much easier to overspend.
2. Easy Credit — As students head off to college, or before, they are often bombarded with easy-to-get credit cards that can make it seem like they have “free” money. These cards enable unwary students to spend beyond what they can afford, and often have unfavorable rates and terms.
3. Rapid Changes — Whether it’s supply chain interruptions or global situations causing fluctuating prices and markets, the financial landscape seems to change more quickly all the time. More financially literate students will be better able to adapt and thrive despite a rapidly changing financial environment.
What Are Some Financial Literacy Skills?
Financial literacy for kids involves learning about many aspects of handling money and finances, including:
1.Working with checks and checking accounts — When was the last time you wrote a check? For some it’s a frequent activity, but others might write only a handful each year, or even none at all. Kids need to learn how to write and endorse a check, and how to balance a checkbook.
2. Analyzing spending patterns — It can feel like money just disappears sometimes. That $50 of saved allowance may not last as long as it seems it should, and having a clear idea of how it’s been spent can clarify that picture.
3. Creating a budget — Whether it’s on a small scale or imagining a future budget for a whole household, knowing how to design a budget to match your resources and goals is important.
4. Understanding how credit works — Learning about credit scores and understanding how to compare credit card terms such as annual fees, annual percentage rates, and other details can set students up with lifelong skills for managing credit wisely.
5. Loans and mortgages — While middle school students are obviously a long way from needing to consider mortgage terms, understanding how loans, loan repayment, and related financial tools work can set them up for making smarter choices with loans for college, cars, and everything else in future years.
6. Understanding the Power of Saving — Starting early with good habits for saving even small amounts can pay off in accrued interest and provide a critical safety net in years to come.
7. Investing — From making imaginary investments in the stock market to learning how stocks, mutual funds, retirement accounts, and other investment tools work, a clearer understanding of these powerful components of financial portfolios can help students explore wider opportunities for working with personal finances.
Financial Literacy Skills Are Valuable Throughout Life
The skills students learn while taking the financial literacy course are precisely the kinds of versatile skills that will help them become the confident, productive, independent individuals who will mold the world of the future. These valuable skills include:
1.Setting goals and figuring out ways to achieve them
2. Creating plans and learning to adapt them as environments and needs change
3. Perseverance and grit—sticking to goals, such as setting aside money toward a savings goal, even when it can be hard and temptation to stop is all around
4. Identifying and fostering good habits
5. Developing independence
Benefits of the Financial Literacy Course at LVDS
Naturally, the primary benefit of taking the financial literacy course at LVDS is to gain the knowledge and skills to better manage personal finances now and in the future. Our course also offers benefits that extend to many areas beyond financial literacy, benefiting students in numerous ways. Some reasons we think financial literacy education is important for kids include:
1. Because our course is offered completely online, students gain the experience of taking a 100% online course which prepares them for similarly taught future courses.
2. Students who take the course have the opportunity to earn high school credit for it, advancing them while still in middle school.
3. Financial literacy skills learned as kids tend to be lasting lessons that inform and improve both financial and non-financial decisions throughout life.
At LVDS, our educational approach seeks to develop students who are confident and self-motivated. Supporting them with coursework in the arts, humanities, computer and financial literacy sets them up for future success in their academic, personal, and professional lives. We welcome you to contact us to schedule a visit to our kinderschool, elementary, and middle school shared campus and learn more about the valuable education our school has to offer.Categorized in: Education