finance essay competition

finance essay competition

The Importance of Financial Education for Youth

1. Introduction

This paper addresses the issue of financial education for children and teenagers, focusing on the Portuguese case. It analyses student perceptions of the main goal of schooling, identifying the areas in which students consider it important to learn about the functioning of a society and of an economy. At its core, the present analysis seeks to assess the extent to which the benefits of financial literacy are clearly identified by students and weigh survey results relating to student perceptions. More specifically, we explore the understanding young students in Portugal have of financial literacy and the usefulness of knowledge in this field. This study will help to assess the strategies underlying the development of financial education initiatives in Portugal, particularly those concerning the teaching of the last of the three skills earlier mentioned, as a way of avoiding that financial illiteracy in Portugal leads to a limiting of citizens’ access to financial citizenship.

The issue of financial education has received significant interest during recent years, given the increasing importance of debtor responsibility in our societies. Likewise, the importance of financial education is internationally recognised and a large number of countries have started to develop specific actions to improve it, alongside large financial institutions. The most critical outcome of such initiatives “might be to enhance individuals’ understanding of basic financial concepts and to make them better informed, responsible borrowers and savers”. In the specific case of credit, the consequences for consumers can be severe, and more so if consumers are young. Indeed, once they fall into arrears, such a situation can become a barrier to their leading a traditional adult life. stresses this fact, pointing out that when people “focus on repaying debt, they are less able to save for their future needs”. This trade-off indeed occurs, especially when it relates to young consumers, given that they don’t have lifelong experience, are only starting to guarantee their financial independence, and likely face pressures from peers.

2. The benefits of financial education

As a precursor to the economic struggles faced by Millennials, it is essential to ask: why is that? To understand why this issue is so important, it can be argued that society, regardless of age, race, or gender, can think more efficiently when an understanding of the economy is present. With advancement comes an expectancy to understand more, and also make the most out of globalization issues; with more opportunities coming up, greater and varied knowledge allows for efficiency. And it is important that society has a sense of personal growth, and the idea should be embraced as growth in commerce in and on itself, and will bring advantages. A better understanding of the financial world provides individuals with better intellectual and economic development to help narrow existing differences including physical, emotional and financial. This study supports the necessity and importance of integrating aspects of a comprehensive financial education program into Mexican high school systems.

Young people today face an uncertain future and they want to be equipped to make smart decisions. The problem is that they often do not know where to turn for advice. Indeed, Millennials have been pegged as the “lost generation” with so many negative complexes about financial conversations and consequences. The possible fear that accompanies the thought of discussing finance with others might be why only 13% of young people were exposed to financial literacy classes in high school in their surveys conducted in 2015 and 2018, respectively. However, when given the chance, young people are interested and want to learn. According to the National Endowment for Financial Education (NEFE) (2017), 95% of young people are in agreement that they know they must be financially savvy for future job success and financial freedom to maintain a sustainable family unit.

3. The role of financial essay competitions

Financial education is needed to enhance knowledge, literacy, and risk management, as well as to develop realistic economic expectations. The need for this type of education stems from the desire to assist the population in adopting concepts and approaches in investing and money management that ensure their financial well-being, facilitate investment in conjunction with assets in the form of insurance, and improve the economy, which in turn brings prosperity to the population. Financial knowledge and its applications can be enhanced through several approaches, including financial essay competitions, which enable learners to develop critical thinking skills. In order to finance themselves in a sustainable way, young students are continuously confronted with life events such as higher education, unemployment, homes at an early age, or the start of their savings for retirement.

Empirical studies have indicated that the success of savings and investment behavior depends largely on knowledge of financial concepts, personal attitudes towards money, and motivation compatible with effective financial reasoning. One of the most important avenues for learning in the information age is competitions. The exercises provided in the competition serve as a visual and engaging source of knowledge, social interaction, and contextual content. Financial education represents the way of improving the financial well-being of young individuals, preventing future financial management problems.

4. Strategies for promoting financial education

The results obtained have confirmed the existence of an improvement in the teaching of personal finance. It strengthens students in their learning while being able to consolidate more knowledge about financial concepts. The Case Study Method combined with Autoconfrontation offers an interesting operational and methodological solution for advancing the quality of financial education delivered, in which students will become better trained for their future role as agents of economic life. The objective of the programs in Financial or Economic Education is to familiarize students with concepts related to finance and economics and to support the development of attitudes and skills that will allow them not only to function in the world of work but also on an individual level given the particularly important role of the family in the creation of value in today’s society.

Much political effort throughout the world is devoted to promoting financial education, but it is not clear whether the designers of the various programs know how to teach for a better understanding of personal financial concepts and behaviors. This paper presents a pedagogical experiment that consisted of monitoring the effect of innovative teaching methods – the Case Study Method and the Autoconfrontation Method – on economic and financial teaching through personal work for engineering students with a different background. The experimental situation has consisted in devising and presenting a personal finance course, which proposes to study different aspects of personal finance. The main innovative teaching method has rested on the use of Case Studies.

5. Conclusion

Since 2007, the government has put significant effort into promoting youth financial literacy by making federal funds available to promote financial education in secondary schools, and efforts continue to grow in 2012. However, there is a need for more states, school districts, and educators to continue making financial literacy a priority, thus closing the financial literacy gap between countries. Local journalists should continue their quests through local media and civic clubs by writing, discussing, and showcasing financial education, continuing to make financial literacy a point of discussion at local schools, colleges, and universities. It is time to make a big movement toward teaching all students baseline financial concepts necessary for effective economic decisions throughout life. Understanding the state of youth financial literacy and disseminating a call for action is part of setting the stage to bring about changes in policy. With your help, the United States can rise as a leader in financial literacy.

While educators generally agree that financial education is vital to a sound K-12 education, the extent at which American youth receive financial education is still in question. There has been a gradual movement toward incorporating financial literacy into the school curriculum, but momentum is still needed before change is widely made. The United States can and should position itself as a leader in financial literacy, as evidence suggests that it could help improve not only the financial condition for our youth, but overall economic conditions for the entire country. Placing financial education into the school curriculum could help jump-start positive changes in the financial management skills of youth, bringing many individuals closer to meeting their life goals. Youth are our country’s greatest asset, and the best time to train them on the importance of financial literacy is now.