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Subramanyam Krishnamurthy

How important is financial planning? Should this be taught in School / College?

Everyone – from an individual to a corporation – knows and acknowledges the importance of financial planning. It is a process by which one can understand what their steady income is, what floating income is expected and when, and more importantly, how much money they need to keep aside for important decisions. A steady income can include one’s salary, guaranteed returns on business investment, a stipend, or for younger people, their pocket money. Floating income includes incentive, commission, moonlighting driven monies, or returns on financial investment. Money that “needs to be kept aside” are for one’s EMIs, rent, pay-outs, holidays, gadget acquisition impulses and more.

It is crucial for one to get involved in financial planning as it not only saves you the rush when a certain pay-out appears; but also helps you make important decisions with regard to lifetime investments. If you are certain about a certain chunk of money coming in and it being saved, you can take a decision with regard to a lifetime purchase like a house. You can also plan to buy a better car, upgrade the electronic gadgets in the house, or take off on a holiday with the family. For those with an entrepreneurial streak, financial planning helps you know how much to allocate for infrastructure and resources, and accordingly plan to increase scale of your business. For those who are aware of how sensitive the index at Dallal Street is, will understand the risk and uncertainty that the stock market possesses. Hence, financial planning is crucial for working professionals, self-employed individuals, pensioners, students and small, mid-scale, and large corporations alike.

Now, it is established that one needs to be aware of how important financial planning is. However, the question here is, should financial planning be included as a part of the curriculum in school or college. Should the youth be introduced to how vital the subject is for them early on?

There have been multiple debates about India’s education system for years now. A lot of people are of the opinion that there are definite flaws that need to be addressed. Several articles and opinion-pieces declare that our youth are being taught things that they have little or no interest in. Some even claim that things that the youth do not need are being driven into their impressionable minds. Amid the incumbent scenario, how will financial planning fit in?

It’s rather simple – we are taught mathematics since a young age. It is explained that it is necessary to be able to add, subtract, multiply and divide as it is crucial for us to function in a professional scenario. In a similar manner, financial planning needs to be understood and explained to the youth as a means to help enhance their future. Knowing how to save, spend and plan expenses is difficult. Not too many people possess this ‘skill’. It is important to impart this skill to children in a non-competitive manner.

After all, a balanced future depends on how financially balanced the adults of tomorrow are.

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