The importance of financial education | Gurami Lekishvili | TEDxYouth@TbilisiGreenSchool

Summary

The video discusses the crucial importance of teaching financial literacy from a young age. It highlights how schools focus on subjects like history and geography but often overlook practical financial skills such as budgeting, investing, and financial planning. By incorporating financial education into the curriculum, students would be better prepared for adulthood, avoiding debt traps and making informed financial decisions. The speaker emphasizes the long-term benefits of financial literacy, not just for individuals but for society, advocating for a change in how schools approach teaching money management.

Takeaways

• 📚 Financial literacy is a critical skill missing in modern education, and it should be taught from a young age.
• 💰 Learning budgeting, investing, and financial planning can provide children with a broader perspective on life and their career choices.
• 🎓 Financial literacy allows individuals to make informed financial decisions, preventing issues like debt traps and poor financial planning.
• 🏠 Understanding loans, budgeting, and investing helps adults handle real-life challenges, like buying a house and managing debt.
• 🌍 Integrating financial education into schools can equip students with tools to contribute positively to society and economic growth.
• 📊 The Organisation for Economic Co-operation and Development (OECD) and its INFE network emphasize the importance of financial education.
• 🇺🇸 Financial illiteracy is evident, with only 27% of the US population understanding inflation and interest, and 52% of UK teenagers in debt by age 17.
• 🏫 Financial education can be integrated into existing subjects like maths, geography, and civic education.
• 👩‍🏫 Teacher training and workshops by financial experts can enhance the effectiveness of financial education in schools.
• 🎮 Interactive simulations and games can teach students the real-life consequences of financial decisions, helping them understand budgeting and investing.

Q & A

Why is financial literacy considered the most critical skill in the modern world?

Financial literacy is essential because it equips individuals with the knowledge to make informed decisions about budgeting, investing, and managing money, all of which are crucial for navigating adult life and avoiding financial pitfalls.

How can financial literacy change a person’s life from a young age?

Learning financial literacy early gives children a broader understanding of how money works, enabling them to make better financial decisions as adults. This prepares them for real-world challenges like loans, investments, and financial planning.

What is the difference between someone who learns financial literacy in school and someone who does not?

A person with financial literacy understands concepts like budgeting, investing, and debt management, which helps them make informed financial decisions. Without this knowledge, individuals may struggle with financial challenges, such as debt traps, leading to long-term financial instability.

Why do people often face difficulties managing loans and debts?

People struggle with loans and debts because they lack understanding of financial principles like budgeting, loan structures, and debt management. With financial education, they would be better prepared to handle such challenges and avoid financial stress.

How can integrating financial education into the school system benefit students?

By integrating financial education into the school curriculum, students gain essential life skills that prepare them for adulthood. This includes understanding budgeting, saving, investing, and managing loans, which ultimately contributes to their personal financial well-being and societal prosperity.

What role does the OECD’s INFE play in promoting financial literacy?

The OECD's INFE (International Network on Financial Education) promotes the importance of financial literacy by working with public experts to address global financial education gaps and provide recommendations for integrating financial literacy into school systems.

What alarming statistics highlight the lack of financial literacy in the US and the UK?

In the US, only 27% of the population understands inflation and can calculate simple interest. In the UK, 52% of teenagers are in debt by the time they are 17, highlighting the significant need for financial education in these countries.

What are some ways financial literacy can be integrated into the existing school curriculum?

Financial literacy can be integrated into subjects like math, geography, and civic education. Schools can offer lessons on budgeting, investing, and saving, while also bringing in financial professionals for workshops and creating real-life financial simulations.

Why should students take initiative in learning financial literacy outside of school?

Given the vast amount of financial information available today, students can take advantage of free resources to deepen their understanding of money. Doing so will improve their own financial futures and potentially inspire others to improve their financial literacy as well.

What impact could financial education have on the global economy?

Widespread financial education could lead to more informed financial decisions, less debt, and greater economic stability. This, in turn, would contribute to economic growth, societal prosperity, and improved financial well-being on a global scale.

Outlines

00:00

🧠 The Importance of Financial Literacy from a Young Age

The speaker imagines a world where children are taught essential financial skills, alongside traditional subjects like history and geography. Financial literacy is portrayed as a crucial life skill, often neglected in current education. The speaker argues that learning financial concepts such as budgeting, investing, and financial planning from a young age can significantly broaden a child's perspective and prepare them for adulthood. The example of two high school graduates, one financially literate and the other not, highlights the importance of being equipped with financial knowledge to avoid debt and financial missteps.

05:02

💼 Financial Literacy in Adulthood: A Key to Success

The speaker emphasizes how financial literacy is vital for adults entering the workforce. Academic achievements may help individuals excel in their jobs, but without understanding how to manage money, they are vulnerable to financial difficulties. The speaker notes that managing debt, budgeting, and investing are essential skills that can improve not only individual lives but also society's economic growth. By linking real-world experience with financial education, the speaker believes students can make informed financial decisions, contributing positively to their future and the broader economy.

🏠 Financial Education and Life Decisions: Navigating Loans and Debt

The speaker explores how financial education plays a critical role in significant life decisions, such as buying a house. Without knowledge of budgeting and loans, individuals may struggle to manage debt effectively. The speaker illustrates that understanding the complexities of financial products, like loans, can make debt repayment more manageable. Failing to address financial illiteracy can lead to widespread negative consequences, such as ruined lives due to debt. The speaker urges the importance of financial education in preventing such outcomes.

🌍 Global Financial Literacy Crisis: The OECD's Findings

The speaker references the Organisation for Economic Co-operation and Development (OECD) and its International Network on Financial Education (INFE), which highlights the global financial literacy problem. Shocking statistics reveal the extent of the issue: only 27% of Americans understand inflation, and 52% of British teenagers are in debt by age 17. The speaker asserts that this proves the need for financial education from a young age. The OECD's recommendation is clear: integrate financial literacy into the school system to address this pervasive issue.

📚 How to Incorporate Financial Education into Schools

The speaker suggests several ways to incorporate financial education into the existing school curriculum. Financial concepts like budgeting, investing, and understanding credit can be integrated into subjects such as maths, geography, or civic education. Training teachers to effectively teach financial topics and involving financial professionals through workshops can also enhance students' understanding. Additionally, real-life simulations and specialized courses focused on personal finance and entrepreneurship are proposed as methods to teach financial literacy.

🚀 Taking Responsibility: The Role of Students in Financial Education

In the final section, the speaker shifts focus to the responsibility of students themselves. While financial education in schools is essential, the speaker encourages students to take proactive steps to learn about money management in their free time. By dedicating time to understanding financial concepts instead of wasting valuable time, students can not only improve their own lives but also contribute to the betterment of others. The speaker concludes by highlighting the transformative power of financial education for individuals and society as a whole.

Keywords

💡Financial Literacy

Financial literacy refers to the knowledge and skills needed to make informed and effective decisions regarding money. In the video, it is emphasized as one of the most critical skills in the modern world, essential for managing loans, budgeting, and investments. The speaker argues that teaching financial literacy from a young age could equip individuals to handle financial challenges and avoid debt traps.

💡Budgeting

Budgeting is the process of planning and managing income and expenses to ensure financial stability. In the video, it is mentioned as a fundamental skill that should be taught in schools, as it enables people to organize their finances and make informed decisions, such as saving for a house or managing debt efficiently.

💡Investing

Investing involves allocating money in assets or financial instruments with the expectation of generating future profit. The video highlights the importance of teaching children about investing, as it is a key component of financial education that can help people grow their wealth over time and contribute to financial independence.

💡Debt Management

Debt management refers to the strategies used to handle borrowing, including understanding loans and repayment plans. In the video, the speaker discusses how financial education can help individuals avoid falling into debt traps by teaching them the complexities of loans and how to manage repayments effectively.

💡Financial Planning

Financial planning is the process of setting financial goals and creating strategies to achieve them. The video argues that integrating financial planning into school curricula can give students the tools they need to make informed decisions about their future, such as saving for retirement or purchasing a home.

💡OECD (Organisation for Economic Co-operation and Development)

The OECD is an international organization that works to build better policies for global prosperity. In the video, the speaker references the OECD’s efforts to promote financial education through the International Network on Financial Education (INFE), which advocates for teaching financial literacy in schools to address the lack of financial knowledge in populations.

💡Inflation

Inflation refers to the general increase in prices and the decline in the purchasing power of money over time. The speaker uses the example of inflation to show the importance of financial education, stating that only 27% of the US population understands inflation and its impact on finances, highlighting a gap in knowledge that could be addressed through education.

💡Loans

Loans are borrowed sums of money that must be repaid with interest. The video stresses the importance of teaching students about loans, as they are often necessary for large purchases like homes, and improper understanding of loans can lead to financial hardship. Financial literacy helps individuals understand the terms and repayment of loans, reducing the risk of default.

💡School Curriculum

The school curriculum is the set of subjects and lessons taught in educational institutions. The speaker advocates for the integration of financial literacy into existing subjects like math, geography, and civic education, arguing that this will prepare students for real-world financial responsibilities and help them make better financial decisions in adulthood.

💡Economic Growth

Economic growth refers to an increase in the production and consumption of goods and services, leading to improved living standards. The video suggests that teaching financial literacy can contribute to economic growth by creating financially savvy individuals who can manage their money effectively, reducing societal debt issues and enhancing overall prosperity.

Highlights

Financial literacy is one of the most important skills a person can have in the 21st century.

Children should be taught not only ABCs and multiplication but also the fundamental principles of money, such as budgeting, investing, and financial planning.

The education system neglects financial literacy, which is crucial for making informed financial decisions later in life.

A financially educated individual can avoid debt traps and plan for future financial stability.

Learning financial literacy from a young age provides broader perspectives on how to earn and manage money.

An adult without financial knowledge, despite being academically educated, may struggle with managing money in real life.

Integrating real-world experience with financial education equips students with tools to contribute positively to society and economic growth.

It's essential to know not just how to earn money, but also how to control it by making informed financial decisions.

Understanding loans and debt management is key to avoiding financial difficulties, such as problems covering debt.

Without addressing the gap in financial education, many people will face consequences, including ruined lives.

The OECD's INFE, International Network on Financial Education, stresses the importance of financial education starting from a young age.

Incorporating financial literacy into existing school subjects like math, geography, and civic education can help address this gap.

Workshops, seminars, and simulations can provide students with real-life scenarios to enhance their financial skills.

Specialized courses on financial literacy, covering topics like personal finance, entrepreneurship, and financial planning, should be offered.

Students need to take an active role in learning financial literacy, as the information is readily available and can change lives for the better.

Transcripts

Transcriber: Thảo Vương Phương Reviewer: Walaa Mohammed

Hello. Imagine a world where, as children,

we were not only taught the ABCs and a multiplication table,

but the fundamental principles of money.

In schools they teach us important subjects such as history or geography.

But imagine a classroom where, alongside maths,

we also learn the depths of budgeting, investing,

financial planning and actual ways to earn money.

Let's step back and look at the present,

where our education neglects

the most critical skill in modern world, financial literacy.

All set, let's dive into a simple yet revolutionary question

what if money was taught from a young age?

As I mentioned, financial literacy is one of the most,

if not the most important skill a person can have in a 21st century.

If we look at a bigger picture,

we will see that everything we do in life is done in order to make money,

whether it is starting working or starting a business.

Learning the fundamental principles of money from a young age

gives a child a much broader perspective of what to do in life,

meaning where and how to earn money.

Imagine two individuals graduating high school.

One of them understands the depths of budgeting, investing,

complexities of loans, and has other financial skills,

while the other lacks the knowledge to make informed financial decisions.

The first person enters adulthood

with all the knowledge to navigate loans and plan for his future,

while the other's vulnerable to debt traps

and is unprepared for the financial challenges that life throws at him.

This example underlines just how important financial literacy can be.

And you know better than me which person you want to be like.

Understanding money is not just something to be talked about theoretically.

In fact, every person needs to know how to use this skill in real life.

Let's consider an adult entering the workforce

with all the academic education but the lack of financial knowledge.

He may be the best worker in the industry, but when it comes to money,

he will struggle if he doesn't know how to budget the money,

manage the debt, invest some, and so on.

Looking at a bigger picture,

we will see just how important it is to understand how money works.

Fundamentally, by integrating real world experience with financial education,

we equip students with the tools necessary to not only change their lives,

but to contribute positively to society,

helping the economic growth and prosperity.

We all know the guarantee to success is starting very hard

as we later get a job, thus we earn money.

There is nothing wrong with this narrative,

but other than earning money,

we also need to know how to control this money.

Because in life we have to make informed financial decisions.

For example, buying a house or in order to buy a house,

a person needs to get his money together.

But usually the salary is never enough.

So what he does is he takes the loan.

Then over time he needs to cover this loan.

But sometimes there might be some problems covering the debt.

That's where financial education comes in handy.

If we actually know how to budget the money

and actually understand the complexities of these loans that we need,

then covering the debt would be so much easier.

Only if we do not address the gap,

we will face the consequences in forms of ruined lives of countless people.

That is something we should avoid at all costs.

First of all, I'm not the only one

talking about the importance of financial education.

One of the biggest organisations,

the OECD, Organisation of Economic Co-operation and Development,

established a network of public experts in 2008,

the INFE, International Network on Financial Education.

They have written an article called "The Financial Education in Schools",

which tells us about the real problem.

And based on the article, I can evidently say that this problem is real.

For example, in the US, only 27% of the population knows about inflation

and can do simple interest calculations.

In the UK, 52% of the teenagers have been in debt by the time they are 17.

The problem is clear.

So the INFE also gives us a very important recommendation.

It is crucial that every child is educated financially

from as young age as possible, when entering the school.

So financial education is evidently important,

but just how can it be integrated with the school system?

There are a lot of ways to start with.

First and foremost, financial education can be combined with school curriculum

as it can be added to already existing subjects such as maths,

geography or even civic education.

This can include lessons about budgeting, about investing, saving,

understanding credit, taxes and basic economic principles.

Professional development or training for teachers

can be provided to enhance their understanding of financial concepts,

so they can later teach these subjects effectively.

Financial professionals or experts can be invited to conduct workshops,

seminars or interactive sessions about money management, banking,

investment and other relevant topics.

Real life simulations or games can be created

which simulates financial scenarios.

This would teach students about budgeting, about investing decisions

and consequences of their financial choices.

Specialised courses can be offered focused solely on financial literacy.

These courses could cover topics such as

personal finance, entrepreneurship, or financial planning.

While there are a lot of ways to teach money in schools,

but for all of these to be possible,

we, the students also need to act.

only if all of us realize how important financial education can be,

we can change the world completely.

But for this to be possible,

it should not only be taught in schools

because the information we have today is beyond unlimited,

and only if you contribute your free time

learning the depths of money, for example,

rather than wasting this precious time,

I guarantee you that not only your lives,

but the lives of countless other people will change in a much better way.

Thank you.