Financial Education in school curriculum: Need of the hour


Sanjeev Kumar G
Founder,, Cochin

Children can do wonders to you if you engage them with money from childhood! Let’s see how.

Meenakshi is in 10th standard now. She used to save the small amounts of money she got from her relatives during occasions like Diwali and birthdays, from the time she was in 2nd standard. Her parents never took the money away from her and instead supported her by giving a small box to keep the money.

When she was in 7th standard she found that her parents have bank account and pestered them to open a bank account for her. Her parents found that banks open SB accounts for children and even give debit cards. They opened an account for her and she deposited all her money in that. She deposited whatever money she received in that account in the following years also.

A few days back was her mother’s birthday. She knew that her mother’s mobile phone was old and used to tell her to change it. But mother was not ready to do it. She went with her father and bought a smart phone costing about Rs.10000 to give as birthday gift to her mother. Her mother was surprised and hugged her with all the love and affection in the world. Tears rolled down.

Children can do wonders to you if you engage them with money from childhood!

Lack of financial literacy leads to disaster

In this world, for anything and everything, money is needed. Most of the issues of people are caused by mismanagement of their finances. Just imagine the journey of a school student. He studies, passes examinations and gets into a job. He is attracted to various luxuries in life which he finds difficult to achieve with his monthly income. He gets a credit card which lures with lot of offers and finally he ends up with a huge credit balance. To overcome the huge monthly payments, he takes a personal loan and somehow manages. He gets married and suddenly expenses went up. He starts worrying about not having enough money to buy a house and for retirement. He looks for easy money and falls into the trap of fraudsters who offer doubling or tripling the money in 1 or 2 years. He loses money there. Then he goes to a stock broker thinking that putting money in stocks will help him recover his losses. Suddenly stock market nose dives. The money he kept for immediate need got lost in such a way. He is then tapped by a greedy insurance agent who sells a money back policy as a retirement plan just to fetch a huge commission. He later finds that it will not help him survive through retired life. Finally, he ends up putting whatever left in just bank deposits to avoid further loss. Whatever money this person earned in his younger ages through his hard work and intelligence is lost due to lack of understanding on various aspects of money.

This is not the story of one person but what is seen across the country. If the boys and girls get financial education from the schools itself, they will take better informed decision when they start earning. From first standard to tenth standard several subjects are taught in our school. These include 2 to 3 languages, mathematics, physics, chemistry, biology, history, geography, civics, moral science and a few more. What about money? While schools aim to create good citizens by inculcating discipline and values in the students they seldom do educate the students in managing their money.

What the survey says?

The Standard & Poor survey from 2014 found that over 76 percent of adults in India didn’t comprehend financial planning basics. Since then various government agencies seriously took up educating children in financial matters.

Money matters!

In order to help school students understand the value of money and the importance of saving, investing and financial planning, Securities and Exchange Board of India (SEBI) and National Institute of Securities Markets (NISM’s) developed a program called Pocket Money. The Reserve Bank of India has undertaken a project titled “Project Financial Literacy” to educate school and college student in dealing with banks. Pension Fund Regulatory & Development Authority developed resource material titled “Introduction to Retirement Planning for School Students” to explain about retirement, retirement planning and pension. Similarly Insurance Regulatory and Development Authority (IRDA) developed resource material to explain about basics of insurance, Insurance Ombudsman, ULIP, motor and health insurance, etc. National Council of Educational Research and Training (NCERT) developed reading material on personal finance with several modules such as Financial Plan, Budgeting, Managing your money, Financing Assets, Protection of Assets, Investing Money, Retirement planning, Taxes and you and career planning.

RBI, SEBI, IRDAI and PFRDA together promoted National Centre for Financial Education (NCFE) which offers Financial Education Training Program for school teachers enabling them to teach money matters. They have the Money Smart School program for school children in sixth to tenth standards. Schools are expected to voluntarily introduce this program for their students.

In 2015, CBSE decided to introduce financial education for the students of Class 9th and 10th. The students are supposed to be taught how to open a bank account, getting and using a debit card, internet banking and learn about various banking and financial products. Students are expected to learn financial management like saving money, setting up a business and making life goals. The schools had to contact nearby banks to take up the project and send details of the bank to the board. Schools had to appoint a teacher who will act as a nodal officer for the school and the banks were also had to identify the nodal officers from their side.

So far, the efforts were to promote financial education by creating awareness and resource materials which schools were supposed to adopt on voluntary basis. But not much progress seems to have happened in that direction. Education is a state subject in India. While central government through its many arms have taken initiatives in imparting financial education among children, most of the state governments have not yet taken any serious efforts in this direction. It’s imperative that central government should announce a financial education policy which direct state governments to include financial education as part of school curriculum. Financial Education has same importance as studying history or science at the school level.

A country can be said to be economically strong only when its people are financially secured and improving financial literacy is the first step in that direction.

Sanjeev Kumar G, a Certified Financial Planner from India since 2005, has more than 25 years of experience in finance spanning across investment analysis, financial modelling, financial planning, stock broking and life insurance broking.

He is an ardent proponent and a pioneer in FEE ONLY FINANCIAL PLANNING in India. He is an International Affiliate member of National Association of Personal Financial Advisors (NAPFA), USA and a member of Financial Planners Association (FPA).

In 2012, Sanjeev Kumar founded Progno Financial Planning Systems (P) Ltd, a Fintech company focussed in developing technologies for wealth management. The company owns India’s first Digital Financial Advisor, which is an automated online financial planning platform.

Apart from writing article in various publications, he also authored the first book on financial planning in Malayalam titled “Dhanikanakaan Oru Margarekha” published by Malayala Manorama.