Due to their young age, students typically save or make money through various methods. On top of receiving allowances, they would also often try to earn more money by taking on small jobs like babysitting, lawn mowing, or dog walking. They might also earn money from birthdays, holidays, or special occasions from family and friends.
Some might be drawn to riskier ways of making money, such as selling shoplifted items or gambling. Although gambling is legal in many states, students are mainly underage and gambling on an even crypto casino number one legalised platform means they are doing illicit activities.
Saving this money in a piggy bank or a basic savings account helps them learn the value of saving and managing their finances. These behaviours indicate these students, despite their young age, recognise the importance of having a financial cushion or at least saving. This is why investing should be taught in schools.
Why Starts Young
Children rarely think about their long-term goals in general. However, they need to understand the importance of it from a young age. Many people today want flexibility in their lives and jobs. Investing provides this flexibility and with the current economy, the earlier they start, the better.
Saving can be useful for short-term goals, but investing is essential for long-term financial growth. Investing is also more beneficial than saving for several reasons. The main difference is that investing money can earn interest, leading to significantly higher returns compared to saving. Over time, the gap between the returns from investments and savings grows even larger.
For example, if we invest $200 each month for 40 years at a 10% compound interest rate, we’ll end up with $1.2 million. However, saving the same amount each month in a regular savings account would only accumulate $96,000. Although this difference may not seem huge, investment returns significantly outpace savings over time.
By teaching students how to invest, they will have the option to live and work from anywhere. Investing can be done from any location as they continue participating in financial markets no matter where they are.
Learning to be an investor also opens up many opportunities as they get in touch with the relevant communities and start expanding their networks.
Good Financial Habits
Investing in the stock market is an effective method for accumulating wealth. It is a crucial part of financial literacy. Understanding how to invest equips students with the knowledge to make informed financial decisions, manage their personal finances effectively, and secure their financial future.
This early education can set the foundation for smart financial habits. Good financial habits can significantly impact one’s financial well-being as an adult.
Investing encourages critical thinking and risk assessment skills. Understanding investment concepts can also inspire entrepreneurial thinking. Students learn to evaluate risks and rewards, analyze market trends, and make strategic decisions, which are valuable skills beyond finance.
This knowledge can help bridge the wealth gap by giving all students the tools to build wealth and achieve financial independence, regardless of their socioeconomic background. Real-life applications of teaching investing and finance in schools demonstrate its practical benefits.
At Sendai Ikuei Gakuen Okinawa High School in Japan, the investment club allows students to manage a real-life stock portfolio funded by the school and donate the protfits to charity. Members discuss the global economy weekly and can only buy stocks with majority approval after attending brokerage firm lectures.
Similarly, Chris Lynch, a middle school math teacher at St. Theresa School in Oakland, uses an online stock market game to teach financial literacy. This project gave each student $100,000 in pretend money to invest over two months to make the learning experience more interactive.
In another example, Jennifer Stockton’s Economics Finance course is popular due to its practical approach. Students receive $100,000 to invest in a stock portfolio. Their investments are later tracked by a computer system that simulates real market conditions.
Despite the stress of fluctuating investments, students like Divya Patel find the experience valuable for predicting market trends and making strategic decisions. This hands-on experience helps students understand stock market dynamics and develop critical thinking skills.
These educational initiatives highlight the impact of incorporating practical investing and finance lessons into the school curriculum. Students not only gain financial literacy skills through engaging in real or simulated stock market activities but also learn to navigate complex economic landscapes.
These practices also teach them to make informed decisions and develop a proactive approach to their financial futures. Such early exposure fosters a generation of financially literate individuals equipped to achieve financial independence and stability, ultimately bridging the wealth gap and promoting economic equality.
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