All over the world, kids are taught to go to school, study to get good grades so they can land a good job to make a good income to be successful. Unless you grew up in an entrepreneurial family, you most likely heard that. However, when you take time to reflect on the usefulness of school in life in general, you would probably conclude that there are some holes to be filled. Some people think that an academic education is pointless, but I would not go to that extreme. There are skills that only a formal education can teach you. In fact, you wouldn’t want a heart surgeon who self-taught, would you?
In school, they teach us how to spell, but not always how to use our words to lift other people up. We are taught how to solve math problems, but not how to manage our money. It baffles me to know that they are professionals who are expert in managing a company’s finances but have no clue how to be financially stable themselves. In fact, there are several financial lessons that they should really teach in school if we’re going to have a generation with healthier finances and happier lives.
How to delay gratification
Delayed gratification is the habit of resisting a temptation now so that you can enjoy something better in the future. For example, saving an extra few months could afford you an exotic vacation while tempted to join your friends now on a weekend trip. Making your money last is an essential skill to have as an adult when you have bills to pay. I know that it is not easy these days because there is so much information thrown at us on the internet. In the 70’s, consumers were bombarded with an average of 500 ads a day. Fast forward a few decades and millennials have to resist 5000 ads daily.
When you have a budget and a financial goal, you must discipline yourself and refrain from spending your money frivolously.
How to Haggle
You can’t exactly test out your haggling skills in a department store, but there are lots of places you can, such as a market, while shopping for a gym membership, subscribing to a cell phone plan and even at the bank. Knowing how to haggle a good price will help you when shopping for cars, and even houses too! This skill is not often addressed but it will serve you tremendously in life and help you save money. By the way, it can help you make a ton of money as well.
Understanding Debt
Not all debts are equal. For instance, some debt can be a good thing if you manage it well. We live in a society where your credit score dictates most of your important purchases (unless you’re loaded with cash of course). So, knowing how to acquire and manage debt can help you to improve your credit score.
There are specific types of credit that you should beware of. Believe it or not, secured joint and couple loans can be dangerous if they’re not managed properly. Unless you’re married or in a serious relationship, avoid those because you are bound to the actions of others. As a banker, I would often deter some clients from getting a credit card even when they could be approved. Accumulating several credit cards when you’re not disciplined will get you in deeper trouble. Remember that banks make a ton of money from fees and interest on loan, so they would gladly offer you a promotion. It may just be a trap.
How Interest Rates Work
When I bought my first car at 20 years old, I was so excited to finally not have to take public transportation or walk everywhere that no other detail mattered. I signed paper for $10,000 car loan at a rate of 9%. It is probably the dumbest financial decision I’ve ever made. Knowing what interest rates are and how they work is important for all types of debt, especially when it comes to expensive purchases. Being able to figure out whether a purchase is a good deal or not will involve examining the interest rate in addition to the other factors.
Passive Income
We all know that school is meant to teach us how to get a job. Recently, there has been a rise in the entrepreneurial studies, but how effective are they really?
The wealthiest individuals generate their income through passive income streams after working hard for a certain period. This topic is widely explained in the book Rich Dad’s Cashflow Quadrant: Guide to Financial Freedom.
Other financial lessons that should be taught in our schools
- How investing and the stock market work
- Budgeting
Do you agree – should they teach these financial lessons in school?
Money-Smart Millennials 