It is the farewell day for the outgoing Senior Secondary class. All boys and girls are experiencing a mixed bag of feelings; the joy of starting an independent life – the anticipation of the college life, and the ache of parting from lifelong friends.
They all sing and dance and click pictures in groups.
Ms Neelima, the Headmistress, can’t help but muse over their future and what life will bring for them.
In the school, they are treated just the same. They wear the same uniform, pay the same fee and are bound by the same rules. In a few years, they will be adult, responsible citizens. But life will not bind them by the same rules or treat them equally. While some of them will reach the stars, the others will struggle hard to stay afloat.
“Why do we have such inequality in our society when we raise all our children alike?” Ms Neelima could never find an answer to this question, no matter how hard she tried.
A few days later, in a chance meeting with a person, who happened to be a financial expert, Ms Neelima got her answer. She was surprised to learn that the answer to her tormenting question was so plain and simple.
The financial expert told her that financial illiteracy is the reason why children from similar educational backgrounds perform differently in their lives. While some of the students will go on to create lot of wealth and live a life of comfort and abundance, the others will live from paycheque to paycheque.
“We teach our students mathematics, science, accounting, arts and so on. We also teach them moral values to live in harmony with people around them, but we never teach them to manage their finances,” the financial expert told Ms Neelima.
He went on to tell her that we are letting generations after generations of financially illiterate students grow up into financially stressed adults – except for a few who get timely financial guidance.
It is not the lack of opportunities – certainly not in present times – why our nation is still grappling with poverty or low household income. It is the financial indiscipline and financial illiteracy that leads to bad money management.
The financial expert helped the Headmistress chalk out a 5-step program to instill financial discipline among her students, from the age of 15 years:
- Introduction to Financial Literacy
Invite financial experts and advisors to explain the need and nuances of financial literacy. Stress on the power of compounding and its role in wealth creation.
- Setting Personal Goals
Teenagers have many dreams. Help them shape these dreams to quantifiable and achievable goals. One-on-one sessions, preferably in the presence of parents, are an ideal way to achieve this.
- Lessons on Mutual Funds Investments
It is never too early to learn the concepts of financial markets and the concept of compounding. One basic tenet of wealth creation is time; hence, students must be taught that staying invested in mutual funds for long time periods is the easiest way to create wealth.
- Coordinating with Parents to encourage habit of regular saving & investments in their ward(s)
Teachers must educate parents about the need to make their children more financially disciplined. Encourage parents to start regular investments in mutual funds (through SIPs) in their child’s name.
- Differentiating Needs from Wants
Encourage students to keep a track of their investments and motivate them to continue investing for at least 10 years to become young millionaires. Teach them to differentiate between needs and wants, enabling them to make spending decisions in accordance with their financial goals.
Ms Neelima is religiously following the financial literacy program in her school. She can already feel a positive vibe in the school, and though it will take a long time, she knows that, in the future, the students passing out from her school will be financially independent and even wealthy adults.
Ms Neelima found the answer to the question tormenting her . . . have you?
Nave Marg Financial Services is led by Dr Celso Fernandes, author of two widely distributed and much-loved books on wealth creation, who is on a mission to alleviate social sufferings caused by financial distress by spreading financial literacy, especially among the young generation.