In my humble opinion, Financial Education is a topic that should be as fundamental as reading, writing, and arithmetic in our school systems. Yet, for many of us, navigating the complexities of personal and business finances often feels like trying to solve an unsolvable problem. THAT IS NORMAL!! This may come as a surprise, but you will never become skilled at anything unless you fail, learn from your failures, and keep showing up to improve a little bit every day. Just keep showing up. There is no secret. Warren Buffet started off with exactly the same knowledge about finances as you and I, NONE!
Financial education isn't just about crunching numbers or managing budgets. It's a fundamental life skill that empowers individuals to make informed decisions about their money, ultimately leading to a more secure and prosperous future for themselves and the ones they love and care about. Here are a few reasons why it's crucial:
Empowerment: Financial education equips individuals with the knowledge and tools to take control of their financial destinies. It enables them to make choices that align with their goals and values. The more information you have, the better equipped you are the make the best decision for yourself and your business. All information is good information, even if it is negative.
Financial Security: Understanding concepts like budgeting, investing, and debt management helps individuals build a solid financial foundation, reducing the risk of financial instability. Think if everyone graduated High School with the knowledge of compound interest, debt amortization, leverage, etc. This would allow better, more informed individual decisions to be made regularly, which in turn, would diminish the overall market volatility (In general, not always). What would happen if everyone were well informed and didn't make financial decisions based on fear, but based on a solid foundation of financial acumen.
Entrepreneurial Success: In the business world, financial literacy is paramount, the numbers tell a story. Entrepreneurs and business owners need a strong grasp of financial concepts to make strategic decisions, secure funding, and drive their ventures to success. What gets measured gets improved, track your metrics, create systems to automate this. If you aren't tracking your metrics and KPI's, it is only a matter of time before you make bad, uninformed decisions for yourself and your business.
Savings and Investment: Consistent Financial education encourages saving and responsible investing, leading to the growth of personal wealth over time. This is not a get rich quick scheme, it is a proven strategy for any skill set, the consistent habits over time, with compounding, will create lasting results.
The Missing Piece: Financial Education in Schools
One glaring issue is the lack of comprehensive financial education in our school systems. Many young adults graduate without basic financial literacy, leaving them ill-prepared to handle real-world financial challenges. Here's why it's a problem:
Life Skills: Personal finance is a critical life skill that everyone needs. It's perplexing that it isn't a mandatory part of all curriculum here in the U.S.
Debt and Financial Stress: Without proper education, individuals are more likely to accumulate debt and experience financial stress, which can have far-reaching consequences. I went through this a couple of different times in my youth. My parents tried to teach me these skills as they recognized the school system wasn't equipping me with them relatively early on, but to no avail, I decided I needed to learn the hard way.... A couple of times... As Merle Haggard so eloquently put "Mama Tried".
Missed Opportunities: Lack of financial knowledge can result in missed investment opportunities and poor financial decisions that have lasting effects. This is a concept called the Time Value of Money (TVM), and is a way to make informed decisions between two different options of investing. I will expound on this in a later blog titled "What Is TMV?"
Just a few common-Sense Solutions
The good news is that there are practical ways to address the complete lack of Financial Education in our lives:
Integrate Financial Education: Schools should incorporate financial education into the curriculum at an early age, middle school is when I believe the concepts should be introduced. Teach students about budgeting, saving, investing, and the basics of entrepreneurship. All too often our schools teach the students how to be a W2 worker, not how to create as an entrepreneur.
Accessible Resources: Make financial education resources more accessible to the public. Online courses, workshops, and community programs can play a vital role in filling the knowledge gap. There are more and more people doing this with a TON of free content today. Follow successful entrepreneurs, knowledgeable financial minds, and any other people already doing what you want to do for yourself on social media. listen to podcasts, read books, surround yourself with like minds, ask questions, never stop learning, and know within yourself that you will do what you intend to do. The only thing that can stop you is yourself, which means, if you fully believe you will make it to your goals, then you will, because you won't stop learning from mistakes and getting better, it's only a matter of time.
Parental Involvement: Encourage parents to engage in financial discussions with their children. Building financial awareness at home reinforces what children learn in school. Stephen R. Covey suggests to have a family mission statement and to get your kids involved, get their input. The simple fact of involving them makes them more aware and informed of these important life skills early on.
Business Engagement: Encourage businesses to support financial education initiatives. They can provide resources, workshops, and internships to help students gain practical financial knowledge. This is more likely than the curriculum in schools fundamentally changing. Always be improving your employees knowledge, it may seem odd, but you are essentially training them to take at least part of your job.
Financial education shouldn't be a luxury, it is a necessity for personal and business success. It's time to recognize its paramount importance and work collectively to integrate it into our education and business systems. By providing individuals with the knowledge and skills to navigate their financial journeys, we empower them to make informed decisions, secure their financial futures, and contribute to a financially literate society. Let's bridge the gap and ensure that financial education becomes a cornerstone of our educational landscape, benefiting generations to come.