Remember PSE/PSHE or General Studies lessons from high school? I remember that you only had to continue General Studies into A-level if you got anything above a D at AS Level. Everyone aimed for that dreamy D grade (I was lucky enough to get the grade and drop the subject!) as it was pretty much seen as a pointless subject.
It got me wondering, what should really be included in these General Studies type lessons, what could have captured our attention that little bit more? Instead of writing an essay based around the moral and legal rights and wrongs of a farmer shooting a trespasser and then being sent to jail (true story, quite a few people just sat there and didn’t write anything!), I think the time would be better spent actually preparing us for adult life.
Sex education is part of the UK school curriculum. It teaches how babies are made, how to practice safe sex, and it touches on life as a parent. But isn’t money as much a part of our everyday grown-up lives? We have to pay rent, have to earn enough to eat and to provide for our kids – but none of this is ever really taught in school. Being ill-informed in this area of adulthood could be the reason for people getting themselves into crazy amounts of debt, struggling to pay the bills and generally struggling when it comes to finance. Yes, we learn about maths, but a mortgage is a far cry away from an isosceles triangle.
Here, I’m going to quickly run through five money lessons that I think should be taught in schools.
Budgeting is part of everyday life
Budgeting means taking your income and dedicating a certain amount of money to each area of your life every month so that you can live within your means. This will include budgeting for your home, food, travel, leisure activities, utilities and savings. This means doing things like creating a food budget and sticking to it, figuring out if it’s worth owning a car while taking road tax, insurance, fuel and maintenance into account. If you’re spending more than you earn, looking at areas where you can cut back. Maybe you’re spending money on a gym membership to run on a treadmill? Sack off the monthly payments and run on the streets for free.
Within this lesson, schools should also touch on credit cards, interest rates and building credit. So many people rely heavily on credit cards and get themselves into debt quickly, without always knowing or understanding how they work or the interest rates applied, but you can build credit by using them correctly.
Make your money make money
You might come into some inheritance or find yourself with some cash in your bank account. Make that money work for you. Imagine if you put £5K into a 2% interest account, locked away for 30 years, you could be looking at a healthy return. Would you miss it by putting it away in a lump sum? It might seriously benefit you in later life – pretend you didn’t have it in the first place and then use the return for something like retirement. Investing in the stock market should also be taught. It’s not a way of making quick cash but, if done cleverly and over a good period of time (five years minimum), it could leave you with a nice sum – early retirement, anyone?
Borrowing money sensibly
The sensible way to borrow money should also be taught. At some point in our lives we may need to borrow some money and there is nothing wrong with that. Things happen and we need things in order to carry on our everyday lives, but borrowing money the ‘good’ way is far better than doing it the ‘wrong’ way. Payday loan companies have all-singing-all-dancing adverts saying that you can borrow cash, but the shining bells and whistles often overshadow the amount you have to pay back. Don’t settle for the first lender you find, shop around. Look for low fees and rates and customer service reviews, where possible.
A mortgage is something everyone is likely to come up against at some point – unless you rent or have enough money to buy a home outright, you’ll need to know about them! Schools should be teaching the basics of taking out a mortgage, what percentage of the property you can borrow, the monthly payments, fixed rates, variable rates, how much you’ll pay back over the length of your term, what to do when your mortgage rate changes. A mortgage adviser can help, but you’ll be paying for them, when, with a little bit of insight learned at school, you could do a lot of it (maybe even all of it) yourself.
Saving for a rainy day
Being taught to put money away for an emergency fund is also a great idea. You never know what might happen. You could lose your job, or have unexpected bills, or maybe something like a funeral to pay for. Perhaps you put 5% of your pay cheque into a separate account every month for this very reason. Getting kids into the mindset of saving for that ‘just in case’ moment is surely a good thing!
It is rather shocking to know that these things, as well as many other financial and life lessons, aren’t being taught in schools. We should be preparing our kids for the life ahead, not hindering their progress.