Why is financial literacy so important and why should we be teaching-learning about this at school

As financial decision-making grows more complex year on year, with consumer habits and financial products rapidly changing, financial literacy has taken a blow. 

For past generations, cash was used for most of our daily purchases; but today, it's rarely flashed—particularly not by younger consumers. We are moving ever closer to being a completely cashless society. Added to this the way that we shop has changed with the boom of online shopping becoming the top choice for many. This has created ample opportunities to use and overextend credit—an all-too-easy way to accumulate debt, and fast.

Meanwhile, credit card companies, banks, and other financial institutions are inundating consumers with credit opportunities—the ability to apply for multiple credit cards or even pay off one card with another. Without proper knowledge and understanding, this makes it incredibly easy to get into financial trouble.

Many of us have a limited understanding of finance, how credit works, and the potential impact current spending behaviours on their financial well-being for the years to come. In fact, the lack of financial understanding has been signaled as one of the main reasons why many individuals face problems with getting to grips with savings and investments.

To give this statement value, every few years in the US, the Financial Industry Regulatory Authority (FINRA) issues a five-question test as part of its National Financial Capability Study. This measures consumers' knowledge about interest, compounding, inflation, diversification, and bond prices. On its most recent test, only 37% of those who took the test got four out of five questions correct, which suggests that the basic economic and financial principles that underpin these problems are widespread, touching every state in the US in different ways. This is lower than it was for the same set of questions given in 2009. Now imagine this outside of the US.