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Financial Literacy for Kids under New Syllabus

Who is watching over your wallet? 

Who is responsible for the 2008 financial crisis that brought the whole world into deep troubles? Banks that take excessive risks? Probably. Governments that impose insufficient regulations? Maybe. We as common people tend to point fingers at others, while forgetting that we may also be guilty of making the crisis happen. Do we borrow above our means to repay? Do we have proper financial planning for our own families? Unwittingly, many of the consumers become the unnamed culprits for the crisis. While the damage has been done, the question remains that how should we avoid a similar one in the future? The Ministry of Education offers an answer.

It all starts from the young

The answer is to introduce financial education for secondary school students in Singapore. Elective modules are introduced aiming at teaching the ability to manage one’s finances and those of one’s family, with focuses on issues such as credit problems or household debts. Such initiative is the first of its kind in Singapore. Before the launch of the initiative, the financial awareness education may be limited to activities such as the National Cashflow Competition. However, this time the MOE puts financial planning as part of the formal education, elevating its status in the secondary schools. Moreover, the secondary schools may actually be an ideal place to start such an education, because children at the young age are malleable and more receptive to value inculcation. Since such education starts from the young, what are the implications of increasing emphasis on financial education among young children?

Put money into their hands

The initiative challenges the idea that children should not handle money because they are too young for that. Many parents take whole control of their children’s finances, giving strictly controlled pocket money and often monitoring how their little ones are spending on their own. The lack of trust in young students for managing their own money well may hamper their financial planning ability when they grow up. It is a wrong assumption that a grown-up will automatically know how to spend; rather, spending one’s money well is a skill that needs to be taught. Hence, the Ministry’s decision to incorporate the skills in the secondary school system is a welcome move to empower young students to watch over their own wallets. The skills taught are likely to have long-term consequences to students, their families and even the society as a whole.

Money and families

All children will grow up and form their own families. They will be owners not only of their wallets, but their bank accounts, assets such as houses and investment such as purchases in the stock market. If they have been taught how to manage one’s money, they will bring the skills into managing their household expenditures. They will know how to assess the risks of borrowing, they will do proper budgeting for the families, and more importantly, they will know the danger of greed and rein in expenditures incurred by envy, jealousy or peer pressures. As many people are going into debt with rising costs on things like housing, education and healthcare, it is imperative that our future generation knows how to balance between needs and wants. People may appreciate the kind of education they received when they were young when they realized how they have potentially avoided devastating and unmanageable household debts.

Money and society

Not only will families benefit, the whole society will become a better place with citizens who are more financially educated. Banks may be creating attractive and risky financial products, but nothing would be sold without its customers. Imagine if millions of the American households know the danger of buying physical assets by cheap credits, the whole world might be spared of the financial tsunami. Singapore also experiences the heat of investment, which could damage the whole society if much of the investment is conducted in an irresponsible manner. Because consumers create trouble mostly unaware of the larger picture, it falls upon the educational institutions to teach people where the ‘red line’ of investment is. Of course, a few modules in secondary schools won’t create miracles by completely preventing the next financial turmoil. But they certainly help to instill the importance of proper financial management that a student may continue to learn throughout his or her life. It is good enough to put children at the start of the long journey of financial education that is a mixture of technical skills, experiences and judgment.

With the gambling industry in Singapore on the rise, the likelihood of bad household management is at the record high. Hence the new modules are a timely addition to the education syllabus to make it relevant to the needs and challenges of society. With the stake for families and society so high when one fails to be a good manager of money, learning financial planning isn’t just an intellectual exercise or an extra-curriculum activity; it may be called a moral duty.

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