One in five 15-year-olds in the U.S. lack basic financial literacy, U.S. News reports. And although children begin forming their attitudes towards money as young as the age of six, most parents and schools don’t teach them money management (only a third of U.S. states require students to take a personal finance class in order to graduate high school). Fortunately, education technology makes it easier for both teachers and parents to teach financial literacy and better prepare students for the financial responsibilities of adult life.
The importance of teaching children how to budget
In 2019, only 67% of Americans have their family on a budget, despite 25% believing everyone should budget. It’s easy for people to hope for the best and not want to plan for the worse, but lack of financial planning can negatively impact everyone in all stages of life — especially young adults leaving home for the first time and looking to take out college loans.
Thankfully, however, younger generations have a more proactive approach towards budgeting. 50% of people aged 22 and under and 74% of 23-38 year olds were found to stick to a budget, according to the source just cited. And it’s all because financial technology — including programs like Mint, Tiller custom spreadsheets, and various apps allowing real-time budget tracking — is now making financial literacy more accessible and appealing for young people than ever before.
It’s crucial educators make use of financial technology to teach students the importance of budgeting, as well as other key money lessons (like necessary vs. unnecessary purchases, the difference between saving and investing, and how credit and loans work). Research (such as, a 2017 study by T. Rowe Price) shows when children don’t learn financial literacy in school, they adopt their parent’s financial habits instead — good or bad.
Benefits of teaching finance with edtech
Using education technology to teach students financial literacy skills can fill in knowledge gaps not being addressed by their parents at home — 83% of teens end up not knowing how to manage money. Education technology helps children learn these skills in engaging and highly-personalized ways, ultimately allowing them to learn at their own pace.
Finance can be a complex topic which intimidates kids and adults alike, but education technology can simplify and break the subject down into manageable chunks. Since children have access to financial technology and digital tools both at school and at home, they’re able to feel more in control of their own learning process.
In turn, teachers can also quickly identify areas of struggle for each student as shown on the learning management system. This allows them to better provide targeted support to help students on their learning journey.
Math, social studies, business, and computing are some of the classes educators can use to teach financial literacy. Teachers can even assign homework instructing students to complete finance-related digital modules.
Gamifying the education process
Education technology can be used to gamify finance, which makes children much more engaged and receptive during the learning process. Learning management systems include class-wide games and a customizable leaderboard, and allow students to win points and badges.
Read more: 5 Tips on how to gamify your classroom
Children can also learn financial literacy with digital apps. In particular, Celebrity Calamity is a fun app which taps into children’s love of celebrities and their glamorous lifestyles. Children get to manage celebrity budgets and attempt to keep stars afloat despite their extravagant spending.
Alternately, Bankaroo is a bilingual (English/Spanish) virtual bank app designed for children aged 5-14. Children get to learn how to budget and save money, set financial goals, and practice basic accounting skills. The app also allows schools to manage individual student accounts for book fairs, lunch money, and more.
In case you had any doubts, teaching children about financial literacy actually works — a recent meta-analysis of 126 studies found that financial education has a significant impact on children’s financial behaviors and financial literacy. However, it’s important to focus on skills applicable to children’s everyday lives, so they’re able to start relevant conversations with their parents at home (understanding the difference between wants and needs and budgeting, for example).
Ultimately, using education technology to teach finance to students provides them with a fun, interactive, and personalized learning experience which sets them up for success.