One of my most enduring memories from high school is that in almost every class I attended, it didn't matter what the subject was, there was always some smarty pants who would say to the teacher "I just don't see how this will help me later in life". Its funny how the teachers never really gave them a satisfactory answer.
It would be quite an experiment, if someone had a record of everything they used in life and which part, if any, came from classes in high school. Maybe the wise-crackers would be right most of the time, but we'll leave that discussion for another day. There are definitely a few subjects which every student could use, and one of them is Financial Literacy. For whatever reason, the principals and education experts have never made this a requirement, though it is hard to think of a better idea.
Financial Literacy class would prepare students with the basics, giving students the opportunity to examine their possibilities and have some basis for making decisions regarding their finances. You want to give students a chance, as many make the most foolish mistakes and ended up mired in debt they are unable to service. Financial Literacy would try to counteract that; here is the way the class would progress.
Week 1. Avoiding scams. The teacher would deliver a tutorial on avoiding scams that prey on the young and naive.
Week 2. How much can you borrow? This lesson would teach you to calculate how much money you can borrow for personal or business purposes, on a variety of mediums. This would include credit cards, personal loans, business loans and mortgages. It would mainly concentrate on cash flow issues, but also touch on the tax effectiveness of some of the different loans.
Week 3. How can you evaluate assets? Students would get an idea of how to size up their assets. Appreciating assets would be contrasted with depreciating assets. Consumables would be contrasted with earning assets. Students would see how purchasing different assets affects net worth over one's life span.
Week 4. How should you invest? The different types of risk involved with any investment would be explored. With so many possibilities for going right and wrong with an investment, students would get an idea about how to spot a dangerous move as opposed to a promising opportunity. Making investments that work can lead to success, and vice versa.
Week 5. Should you leverage your investments. This lesson would run through the advantages and risks associated with leveraging investment portfolios. Tax would have to be covered to some extent in this lesson also as there are some definite tax advantages when borrowing to invest.
Final module. Coming to the end of Financial Literacy class, students would try and see the big picture. Laying out the biggest mistakes made by the young would be an excellent closing statement. Along with any cautionary tales, there would be a way to approach finances proactively. For the young, the advice given would be to work with what you have, and line up ways to increase your earnings without taking on high risks.
It would be quite an experiment, if someone had a record of everything they used in life and which part, if any, came from classes in high school. Maybe the wise-crackers would be right most of the time, but we'll leave that discussion for another day. There are definitely a few subjects which every student could use, and one of them is Financial Literacy. For whatever reason, the principals and education experts have never made this a requirement, though it is hard to think of a better idea.
Financial Literacy class would prepare students with the basics, giving students the opportunity to examine their possibilities and have some basis for making decisions regarding their finances. You want to give students a chance, as many make the most foolish mistakes and ended up mired in debt they are unable to service. Financial Literacy would try to counteract that; here is the way the class would progress.
Week 1. Avoiding scams. The teacher would deliver a tutorial on avoiding scams that prey on the young and naive.
Week 2. How much can you borrow? This lesson would teach you to calculate how much money you can borrow for personal or business purposes, on a variety of mediums. This would include credit cards, personal loans, business loans and mortgages. It would mainly concentrate on cash flow issues, but also touch on the tax effectiveness of some of the different loans.
Week 3. How can you evaluate assets? Students would get an idea of how to size up their assets. Appreciating assets would be contrasted with depreciating assets. Consumables would be contrasted with earning assets. Students would see how purchasing different assets affects net worth over one's life span.
Week 4. How should you invest? The different types of risk involved with any investment would be explored. With so many possibilities for going right and wrong with an investment, students would get an idea about how to spot a dangerous move as opposed to a promising opportunity. Making investments that work can lead to success, and vice versa.
Week 5. Should you leverage your investments. This lesson would run through the advantages and risks associated with leveraging investment portfolios. Tax would have to be covered to some extent in this lesson also as there are some definite tax advantages when borrowing to invest.
Final module. Coming to the end of Financial Literacy class, students would try and see the big picture. Laying out the biggest mistakes made by the young would be an excellent closing statement. Along with any cautionary tales, there would be a way to approach finances proactively. For the young, the advice given would be to work with what you have, and line up ways to increase your earnings without taking on high risks.
About the Author:
Damian Papworth acknowledges that you do not need mutual fund investments. With some simple investment strategies, you are capable of being your own investment manager.
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