Financial Literacy, a Crucial Course to Be Taught in Schools: Sadikshya Bhandari

By Sadikshya Bhandari 

Financial literacy is the possession and effective use of financial skills which allow an individual to make effective financial decisions regarding budgeting, investing, etc. It is a crucial life skill to possess in this time and age where money has become the mere source of survival and prestige. However, according to studies, financial literacy in Nepal is quite low which is why it has become even more critical for children to be taught financial literacy courses from a young age. Such a course would help children to save, budget, and invest their money optimally.

Students need to be taught how to use a credit card responsibly so they have little to no credit card debt. Young adults tend to make rash decisions without knowing their consequences which is why they can easily lose credit. It is very easy to ruin credit but it is tough to regain it. Once the credit is ruined, it becomes that much more difficult to get approved for loans and improve one's creditworthiness. In order to be safe from credit traps, students should be provided information on debt as early as possible.

Young adults must be provided information regarding interest rates and loan payments so that they can quickly pay back the amount and not get drowned in student debt. The cost of education is only going to keep increasing as time goes on. So, it is important for students to understand interest rates and have an idea of how much to borrow for college. Interest rates can really impact finances; one could even end up paying more than the principal amount if they do not have proper knowledge regarding borrowing rates.

It is very crucial to know how to calculate our taxes and take advantage of tax deductions and credits. Most of the students know the definition of tax but how many of those students actually know how to calculate taxes? The answer is almost none of them. Knowing how to correctly calculate your taxes can save you thousands or even millions when filing your taxes. The taxes which are taken from our paycheck are an estimate of what we owe. Sometimes, the tax amount is overestimated and we end up paying more than what is necessary. Hence, it is important for children to learn such skills early on so that they can wisely utilize their money.

Students, from a young age, need to start prioritizing savings since it will not only help them to save but also build skills that will be utilized throughout their lives. The recent and ongoing pandemic has hugely impacted people's savings and even swindled some out of all their savings. Those who did not have a lot of savings, especially millennials, faced a financial crisis during the pandemic.
Maintaining savings allows us to slowly build a reserve which can then be used for retirement or emergencies such as the pandemic.

There can be no doubt that if we do not correctly utilize our financial resources we can not be financially stable and grow our money. As we grow older, we tend to realize the importance of money in this capitalist society. By that time we will have made financial mistakes that could take years to fix. Instead of helping in times of financial difficulties, we can help prevent them. Making financial literacy a compulsory course would guarantee the financial sustainability of young people.

Sadikshya Bhandari , Student, Kathmandu University School of Management