Financial Literacy Should Start in High School by Katie

Katie's entry into Varsity Tutor's November 2021 scholarship contest

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Financial Literacy Should Start in High School by Katie - November 2021 Scholarship Essay

One night at dinner my parents were talking about a purchase on their credit card account which they did not make. They discussed notifying the bank, checking for other fraudulent charges, freezing their credit and requesting a copy of their credit report. I thought to myself “what is a credit card report“ “how do they know how to do all this”?

“Financial literacy is the ability to understand and use various financial skills, including personal financial management, budgeting, and investing. Financial literacy is the foundation of your relationship with money, and it is a lifelong journey of learning. The earlier you start, the better off you will be, because education is the key to success when it comes to money.” ( Financial literacy involves a number of different areas of understanding. Learning about money and how it works is an important aspect, as well as understanding credit, loans, and investments. Personal finance is not a required subject in high school. Schools need to provide high school students with not only an education in Math but more specifically the facts and tools necessary to make smart choices and manage their finances throughout life.

Managing money effectively is not a skill that comes naturally to everyone. Unless a person is exposed to the practice of money management, he/she is less likely to understand how it works and its long-term benefits. Without a financial education, it is easy to develop poor spending and financial habits resulting in significant consequences such as a poor credit rating, denial of credit, rejection for a checking account and bankruptcy. Early financial literacy is the best way to prevent such consequences. Personal financial literacy is much more than managing and investing money. It also includes making all the pieces of your financial life fit together.

Students would benefit from learning the fundamentals of analyzing a situation, identifying the choices and making an informed decision. These are processes that can be learned and practiced. Important areas to learn are how to set personal and financial goals, making money, understanding income taxes and how to complete a tax form, creating and following a budget, living on your own, buying a home, banking services, credit, credit cards, cars and loans, consumer awareness, saving and investing. There are software programs available to teachers to take book knowledge to a real life scenario with personal finance games. Students build a budget to manage income, expenses and savings, react to real-life scenarios presented and manage their credit.

Some people argue that teaching children financial basics is the parents’ job; however, this doesn’t always happen or some families are passing along poor financial skills from generation to generation. Education takes place in the home and in schools; therefore, schools should bear some responsibility for teaching financial literacy to empower students with skills and knowledge to thrive.