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School children should be taught financial basics including budgeting, distinguishing good and bad debt and establishing a business in order for more of the population to understand how to successfully manage money, according to a property investment expert.
In a recent blog, Right Property Group director Steve Waters said educators continued to ignore the importance of financial literacy in helping more Australians to invest effectively and avoid financial strain.
“Financial literacy should be mandatory, not just as an advantage to individuals but as a societal benefit more widely,” Mr Waters said.
“Imagine what our nation would be like if the next few generations were smart enough to manage their spending and plan for a lifetime of consumption and enjoyment without the stress of draining all their resources.”
In his experience, Mr Waters said, many Australians only looked at adopting a structured investment strategy when their retirement was in sight, forcing them to play catch-up on the years where they were not planning and budgeting effectively.
“Obviously this end focus is important and should be part of an investment strategy, but the great failing is people aren’t taught how to deal with money throughout every stage of their lives,” she said.
“Having this ongoing knowledge around money management and investing would embed smart decisions in our financial DNA.”
Some of the issues the next generation of investors could focus on in their financial education included the dangers of credit cards, how to manage their own financial position and assess the value of different investments.
“It would be so easy to run the hypotheticals with kids about how money coming in is a limited resource and how utilising that income wisely lets you both enjoy the now and plan for a rainy day,” Mr Waters said.
“They should also learn how finance works - talk about loan applications, the idea of good versus bad debt and how you can leverage money safely to own a home or build an investment portfolio.”