A Case For A Financial Literacy Class

  
     
  By: Damian Papworth  
 

Thinking back over my days in high school, I remember the presence of some character in every class who was constantly asking the teacher, "How will this be useful for me in my life out of school?". No matter the class, no matter the situation, the question would arise, to the disbelief and annoyance of the teacher, who never really gave an answer.

What a great exercise it would be, to find out what exactly turned out to be useful from each class, and in which cases those troublemakers were right. In other words, what have I actually used to get ahead in life and which class did it come from? However, that exploration will be left for another time. There is one subject which would obviously be useful for anyone in any career or vocation, one that should be taught in every school, but for some reason never is. The subject is Financial Literacy, something we could all put to excellent use.

Financial Literacy as a subject in school would be a course examining the impact of certain decisions on your finances, encompassing major and minor decisions. Basically, the goal would be to arm students with enough knowledge of the financial world that they wouldn't go out and make the foolish mistakes that drive so many people to financial ruin every year. The curriculum would go in the following direction.

Week 1. Are you being scammed? Students would be shown how to spot a scam and avoid it. It will prevent a variety of mistakes.

Week 2. Will you be able to pay back the money you borrow? The second part of the class would help students figure out if borrowing money for business or personal use is a smart idea. Credit card debt, mortgages, and other loans would be discussed. The idea would be to give students a concept of cash flow and how to service a debt, while exploring tax benefits of debt.

Week 3. How can you evaluate assets? Students would get an idea of how to size up their assets. Appreciating assets would be contrasted with depreciating assets. Consumables would be contrasted with earning assets. Students would see how purchasing different assets affects net worth over one's life span.

Week 4. How should you invest? The different types of risk involved with any investment would be explored. With so many possibilities for going right and wrong with an investment, students would get an idea about how to spot a dangerous move as opposed to a promising opportunity. Making investments that work can lead to success, and vice versa.

Week 5. How should you leverage investments? Working with investment portfolios, students would be instructed on the process of leveraging. Tax concerns would be part of the lesson, as there are significant tax breaks available when taking out a loan for an investment.

Final module. Coming to the end of Financial Literacy class, students would try and see the big picture. Laying out the biggest mistakes made by the young would be an excellent closing statement. Along with any cautionary tales, there would be a way to approach finances proactively. For the young, the advice given would be to work with what you have, and line up ways to increase your earnings without taking on high risks.


  
  Article Source: http://yourfinance.co.za   
     
 
About The Author
Damian Papworth acknowledges that you do not require mutual fund investments. Having learned some easy investment strategies, you can be your own investment manager.

 		  
     
 
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