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Four Lessons in Personal Financial Planning that Should be Taught in School

5 Aug 2019

Indian households have always been silent and hushed about having discussions about money and investments in front of children. The idea and habit to keep it under wraps comes from the notion that the kids should not know if the family is facing any financial troubles. At school, the concept of money and managing money is superficially touched in economics classes. However, since the school students have no idea about finances, they end up believing that managing money is easy and everybody is good at it naturally. This cannot be further away from the truth.

Children grow up believing all the wrong things when it comes to money and enter adulthood blindfolded. From school to college, and their first job, circumstances keep getting tougher and they struggle with personal finance. Here arises the need for managing personal finances.

Fast forward and these children are young adults now. They quickly fall in the trap of overspending and living paycheck to paycheck. Then comes in the option of availing credit cards since credit is quite easily available these days. Debt gradually piles on and before they realize, they owe much more than they can repay.

All these situations could have been avoided if discussions about finances were treated just like everything else. Common. These four lessons should be taught in school!

Lesson 1: Save not because you can, but, because you must!

The importance of saving must be emphasized from the very beginning. From childhood, the idea that one should spend what is left after saving and not save what is left after spending is quintessential.

Spending = Income – Saving

Such a small change in an equation will make a huge change in their future. With the increasing number of lifestyle related diseases, it is essential for one to maintain an emergency fund. As a rule, one can say that having enough to cover three months of your usual expenditure is an adequate emergency fund, however, you may save up more if you have any health issues that may be of immediate concern.

Lesson 2: You can invest small amounts too!

One must understand that investment doesn’t always mean saving enough to buy a house. You can start investing through SIPs and investments in the stock market which have a higher rate of return than a savings bank account when investments are done responsibly. To start investing is important. Many people believe that one needs substantial money to even start investing. This couldn’t be further from the truth. Start small, assess your risk appetite and then plan what investment instruments are suitable for you that will add up and make your personal investment plan. Not everybody needs to invest in all asset classes. Everybody has different and unique financial goals and one must align their personal investment plans with those goals.

Lesson 3: Patience is the key

When you invest in moderate risk and moderate return instruments, the time it takes to grow one’s wealth is not instantaneous. To a generation of people who have always been instantly gratified, being patient becomes very difficult. However, patience is the key to all financial investments. Not every day would you find financial unicorns. However, to invest in a responsible way, to have shortlisted companies on research-based findings and in field which you understand is a good idea. Equally important is understanding the business cycles and investing at the right time. Patience will help you grow your returns in the long term even when there is volatility in short term.  

Lesson 4: Set financially SMART goals and work towards achieving them

Financials goals are not just dreaming about owning a house or owning a car. These goals need to be quantified, reasonable and achievable. Very often, people set unrealistic financial goals and even if they quantify them, have no serious idea about how they are going to achieve them. Financial independence should be talked about openly. Only when we remove the stigma around having discussions about finances and financial planning with family and friends shall we be able to assess our financial knowledge and grow it.


These four simple lessons must be learnt at the earliest time in adulthood, since they weren’t taught at school! Managing personal finance is not rocket science, it does not require any additional degrees. However, if one is vigilant and mindful in their financial activities daily, these lessons will help in many ways. It is the age of revolution in FinTech, there are applications introduced by commercial banks as well as other startups which budget, monitor and track spending all under one app. It’s about time millennials conquer their personal finance and right now is a great time!

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