Why Financial Literacy Matters for Students

Financial Literacy for Students: A Guide

by Manchester Global School
May 23, 2024

Financial literacy is one of life's fundamental skills. It is important for schools to address it much more fully in their teaching as all students will need to develop a strong understanding of it on their journey into independent adulthood. This blog post focuses on the significance of financial literacy for students, providing insights into its impact along with sharing some practical strategies that MGS will be using for raising the bar in terms of teaching this core personal skill, along with some ideas for working on it at home.

Why Financial Literacy Matters for Students

Setting a Strong Foundation

Financial literacy provides students with the foundation to comprehend financial concepts, enabling them to navigate their personal and professional finances with confidence. By understanding principles such as budgeting, saving, and investing, students can develop independence from family much faster, ensuring their own financial security for the future, which will become more and more important in the age of Artificial Intelligence.

Avoiding Debt Traps

In the past, and still presently, many students have been let down by schools which have lacked a focus on holistic development, leaving un-clued-up graduates to encounter the dangerous pitfalls of debt, due to a lack of financial literacy. Equipped with the knowledge of the differences between types of loans, understanding how manage credit responsibly, and a grasp of the applicaiton of interest rates, students can steer clear of debt traps and maintain financial stability. In many cases, well educated, financially literate school graduates will be savvy in saving costs whilst at university, be able to discern between income methods whilst studying and be already planning for their financial future before their Undergraduate studies are complete.

Building Wealth

Financial literacy empowers older or interested younger students to understand the various ways of going about wealth accumulation. Through education on investment strategies, the concept of compound interest, and understanding the need for retirement planning, students can create long-term financial security and prosperity.

Making Informed Decisions

In an increasingly complex financial world, students will have many financial decisions to think about, even in the first few months living away from home: Which bank to open an account with, how to set up rental payments for accommodation, which credit cards to make use of (or not) are just the tip of an ever growing, monetary ice-berg. Financial literacy as part of a strong holistic education equips them with the critical thinking skills to evaluate options carefully, aligning their choices with their financial goals and aspirations.

The Impact of Financial Literacy on Student Success

Financial literacy is a good example of interdisciplinary learning, combining elements of maths, business management, economics and other subjects. Good financial literacy skills impact across various spheres of a student's life which also helps reinforce their understanding of key concepts from various subject backgrounds.

Academic Performance

Students proficient in financial literacy often show enhanced academic performance. By managing their finances responsibly, they reduce stressors that might otherwise reduce their focus and academic achievement.

Career Readiness

Financially literate students enter the workforce equipped with essential money management skills. They are better prepared to navigate employment benefits, negotiate salaries, and make informed decisions regarding workplace retirement plans.

Personal Well-being

Financial literacy correlates with improved personal well-being, fostering a sense of security and confidence in students' financial futures. By developing healthy financial habits early on, students can mitigate financial stress and cultivate overall well-being.

Essential Concepts of Financial Literacy for Students

Financial literacy encompasses a range of fundamental concepts essential for students' financial understanding.

Budgeting Basics

Budgeting serves as the cornerstone of financial literacy, enabling students to allocate their resources effectively and prioritise spending in alignment with their financial goals. At Manchester Global School , many concepts within maths can be tied to budget planning, interest rates and spending, which brings students face to face with the skills needed for personal success at a very early age. Through the leadership opportunities in our clubs, passion projects and boarding activities, students will be trained and become very familiar with budget planning, proposing costs and then working through various means to put the money in place to make some of their activities and products a reality.

Understanding Credit and Debt

Students must grasp the intricacies of credit and debt, including the implications of borrowing, managing credit responsibly, and navigating debt repayment strategies.

Saving and Investing

Financial literacy educates students on the importance of saving for short-term goals and investing for long-term growth, introducing concepts such as compound interest, asset allocation, and risk management.

Financial Planning for the Future

Students are encouraged to engage in forward-thinking financial planning, encompassing aspects such as emergency savings, retirement planning, and insurance coverage.

Practical Strategies for Enhancing Financial Literacy

Empowering students with financial literacy requires a multifaceted approach, incorporating both educational initiatives and practical strategies for application.

Utilising Educational Resources

Students can leverage a plethora of educational resources, including online courses, workshops, and interactive tools tailored to their specific needs and learning preferences. Within the IB, various units of work throughout the PYP, & MYP will focus on mathematical concepts closely related to financial literacy and personal financial management. By the time students reach the DP, then Business & Management, along with Economics are just two of the subjects drawing on prior learning and going beyond personal, into corporate and even international level financial matters.

Whilst the IB frameworks guide a school on the skills to teach, Manchester Global School's approach to unit planning means that many of the basic skills of financial literacy are built in to the core of our programmes and through experiential learning such as planning their own trips, managing their own entrepreneurial projects - including budgets - students get real-life experience of managing money, with suitable mentoring, support and accountability.

Tracking Expenses and Creating Budgets

Encouraging students to track their expenses and establish budgets fosters a deeper understanding of their financial habits and priorities, empowering them to make informed spending decisions. Researching, planning, proposing and even sitting down with the school management to budget their own events, activities, projects and trips will form the basis of much of this learning.

Starting to Invest Early

Introducing students to the fundamentals of investing early on instils the importance of long-term wealth accumulation and financial planning, setting them on a trajectory towards financial independence. Virtual investment games and clubs which track stocks and shares will provide ample opportunities for students to gain experience of investment, without serious financial risk. Adding competitive elements through our house team competitions will give them enough edge to understand the highs and lows, without parents being left empty-pocketed.

Seeking Guidance from Professionals

Students benefit from seeking guidance from financial professionals, including financial advisors or counsellors, who can provide personalised advice and support tailored to their circumstances. Bringing in experts and sharing

Implementing Financial Literacy Programmes in Educational Institutions

Integrating financial education into the curriculum is paramount for fostering financial literacy among students.

Importance of Integration

Educational institutions play a pivotal role in integrating financial literacy into the curriculum, ensuring that students receive comprehensive and ongoing financial education from an early age.

Examples of Successful Programmes

Numerous successful financial literacy programmes serve as models for educational institutions seeking to implement effective initiatives, emphasising hands-on learning, real-world application, and student engagement.

Strategies for Engagement

Engaging students in financial literacy requires innovative and interactive approaches, such as gamification, experiential learning, and peer-to-peer mentoring, fostering enthusiasm and participation. With our boarding students will have access to their own pocket money and be involved in the planning of their weekend trips and activities, in order to build up their personal ability to plan for projects.

Challenges and Solutions in Financial Literacy Education

While the benefits of financial literacy education are undeniable, various challenges exist in its implementation, necessitating creative solutions and collaborative efforts.

Addressing Barriers to Financial Education

Barriers such as limited access to resources, disparities in financial knowledge, and cultural stigmas surrounding money must be acknowledged and addressed to ensure equitable access to financial education for all students.

Tailoring Programmes to Diverse Student Needs

Recognising the diverse backgrounds and learning styles of students, our financial literacy programmes will be tailored to meet the unique needs and preferences of individual learners, fostering inclusivity and accessibility.

Collaborating with Stakeholders for Support

Effective financial literacy education requires collaboration among educators, policymakers, parents, and community stakeholders to provide comprehensive support systems and resources for students. Indeed, parents and external experts will be invited to talk about how different personal financial matters can be viewed from other perspectives - banking, loans, loan sharks, and debt collection approaches can call be key learning opportunities.

The Role of Technology in Financial Literacy

Technology plays a pivotal role in enhancing financial literacy education, offering innovative tools and platforms to engage students and facilitate learning.

Mobile Apps and Online Tools

Mobile apps and online platforms provide students with convenient access to financial resources, including budgeting apps, investment platforms, and educational games designed to improve financial literacy.

Gamification of Financial Learning

Gamification strategies, such as interactive quizzes, simulations, and challenges, make learning about finances engaging and enjoyable for students, fostering motivation and retention of key concepts.

Virtual Simulations

Virtual simulations allow students to practise real-world financial scenarios in a risk-free environment, honing their decision-making skills and preparing them for future economic challenges.

Promoting Financial Literacy Beyond the Classroom

Financial literacy education extends beyond the confines of the classroom, encompassing community outreach, parental involvement, and lifelong learning initiatives.

Community Outreach and Partnerships

Collaborating with community organisations, financial institutions, and local businesses expands the reach of financial literacy programs and provides students with opportunities for experiential learning and mentorship.

Parental Involvement

Parents play a crucial role in reinforcing financial literacy concepts at home, fostering open discussions about money, and serving as role models for responsible financial behaviour.

Lifelong Learning and Financial Empowerment

Encouraging lifelong learning empowers students to continue expanding their financial knowledge and skills beyond their academic years, equipping them with the tools they need to navigate financial challenges throughout their lives.

Measuring the Impact of Financial Literacy Programmes

Evaluating the effectiveness of financial literacy programmes is essential for continuous improvement and ensuring positive outcomes for students.

Evaluating Student Knowledge and Skills

Assessing student proficiency in financial literacy through standardised tests, surveys, and performance evaluations provides valuable insights into the effectiveness of educational interventions.

Tracking Long-Term Financial Behaviours

Monitoring students' financial behaviours and outcomes over time, such as savings rates, debt levels, and investment portfolios, offers a comprehensive understanding of the long-term impact of financial literacy education.

Identifying Areas for Improvement

Analysing data on student performance and financial outcomes helps identify areas for improvement in financial literacy curriculum, pedagogy, and program delivery, informing future initiatives and investments.

Empowering Students for Financial Success

In conclusion, financial literacy is a critical life skill that empowers students to make informed decisions, achieve their financial goals, and secure their futures. By investing in comprehensive financial education programmes and fostering a culture of financial empowerment, we can equip students with the knowledge and skills they need to thrive in today's complex economic landscape.