Financial Literacy Before Entrepreneurship
Studying entrepreneurship is hugely popular with kids and teens because many of them want to start businesses when they grow up. And accordingly, schools and other educational institutions have jumped on the bandwagon, with scores of programs and camps that teach kids all about entrepreneurship.
Yet, these entrepreneurship programs are missing one key element – financial literacy.
They teach kids various skills like writing business plans, pitching to investors, prototyping, marketing, hiring a team etc.
While all of these might be important to a young entrepreneur, knowledge of how to manage money smartly and responsibly is paramount. And yet there isn’t a single entrepreneurship program that gives financial education the importance it deserves.
And it deserves a lot.
A majority of the young entrepreneurs will be bootstrapping their business and this is where their knowledge and habits of being careful spenders and budgeting efficiently will come into use.
They need to distinguish between, and prioritize their needs over their wants. Lack of this basic awareness will lead them to burn through their funds at an alarming rate thus paving the way for an entrepreneurial disaster.
They need to understand how credit works and how to stay away from bad debt, while capitalizing on the advantages of good debt.
These young entrepreneurs also need to understand the importance of having and maintaining a good credit history. Many bank lenders look at personal credit histories before they agree to give these entrepreneurs start-up loans. Having a poor credit score will scuttle their chances of getting those loans, even if they have the best business plan out there.
Most importantly, they need to develop a proper money mindset that will help them grow their business and wealth and not hinder it.
We need our kids to be successful entrepreneurs in the future.
We need them to take on and solve problems and contribute meaningfully to the betterment of society. So let’s equip them with the skills they need to do that…and financial literacy is possibly the most important one.