When you were at school, did you wish there was a subject that taught you how to handle money properly? I wished the subject of finance had been taught at school. It would have saved me a lot of detours and time. That’s why I launched Schulgold together with my co-founders Karolina Decker from FinMarie and Dragos Nedelcu. Schulgold is a digital learning platform for students that is used by teachers in classrooms. We founded Schulgold to bring the topic of financial education into schools. During an interview, I was asked exciting questions about financial education, which I would like to answer in today’s podcast episode.
Do we need financial education as a school subject?
Absolutely! Over 50 percent of people in Germany have not received any financial education. This is a huge challenge. Children do not learn the meaning and value of money at school. Because of this lack of knowledge, they are often unable to relate to money. They also don’t learn how to build a life of financial abundance.
There are many aspects of financial illiteracy in Germany. What basic knowledge should we have?
It is extremely important to start by looking at the value behind money. In other words, how much do certain things that I want cost? Secondly, you need to understand how much time a person must invest to create this value. It helps to realize that the material value of things is very closely linked to lifetime. And this is also the link to the third insight: Time that we cannot spend with our friends and family can lead us to feel unfulfilled. Fourthly, we need practical knowledge on how to build our wealth and what steps we need to take to do so.
What are the effects of a lack of financial education?
People are not naturally in a position to make sound financial decisions. They do not develop an understanding of money because they do not know its value. Financial education also includes dealing with credit. There is a lack of education about the negative spiral that debt can set in motion. Don’t buy anything you can’t afford! If I don’t learn how to handle money strategically from the outset, I will find it difficult to build up my wealth. As a result, I won’t be able to live in the financial abundance I would like to live in. In addition, a lack of financial education means that people don’t realize that they, alone, are responsible for their financial situation. They look for someone to blame for their situation.
Isn’t a financial literacy course at the age of 18 good enough?
In my experience, this is not good enough at all because we are already very far along in our personal development at the age of 18. By that time, we are very likely already the “product” of our environment. If a child grows up in financial circumstances that are characterized by debt due to loans or bad feelings about money, then their own financial path is negatively preloaded. As the child does not know that there are “other” financial paths, the familiar ones are taken. The topic of financial education must absolutely be taught in schools in order to create better opportunities for our children! 
Is the crucial nature of financial education underestimated in politics?
Certainly! If people do not learn early on that they bear full responsibility for their financial situation, then one consequence of this can be that people rely more on social systems and then “burden” them in the long term.
The number of people in debt has risen in recent years. What are the biggest temptations?
Do you know how high the debt in Germany is? It is currently over 2 trillion, 44 billion euros! That means a current sum of EUR 24,600 per capita. Debt is increasing by almost EUR 10,000 per second! These figures are from 15.07.2020. You can find out about the current level of debt at any time on the page The Taxpayer. Debt is increasing every day because people do not know and in some cases have not understood the important basic principle: Only buy what you can afford! In the past, I didn’t know the difference between “good debt and bad debt” either. There is huge misdirection in the economy, which entices people with zero-percent financing and makes it an “it” factor to buy certain things on credit. Banks and commercial enterprises are tempting people with cheap consumer loans, and people are not being honest with themselves and not admitting that they cannot afford certain things at the moment. It is important to develop alternative ways of fulfilling consumer desires without using financing. It’s no good at all to pay back a vacation you take today over the next one to three years. How are you going to afford a vacation later if you can’t afford it today? For me, financial education is the basic prerequisite for a fulfilling and successful life.
What can people do if they still want to go on vacation? And how can I buy a car with little money, for example?
If you want to go on vacation or buy certain things even though your account balance doesn’t allow it, you can use the following alternatives:
- If you want to travel and don’t have any money, use systems such as Couchsurfing or “work and travel”.
- Start saving for your financial wishes in a separate account early on.
- Use marketplaces that offer used items at a low price.
- Buy a car that is older.
- Take a look at the everyday situations in which you can save money. This could be your daily coffee-to-go, for example.
- Develop ideas to increase your income.
People with a lower level of financial literacy are more likely to take out expensive loans, save less for their old age and often don’t even know what effective interest rates they pay on loans. Yet these are supposedly simple concepts that would at least help people avoid falling into the debt trap. 
What simple concepts are there to avoid falling into the debt trap?
This is an important topic! Lack of knowledge on the one hand and poor money sense on the other leads people into these tight situations. There are simple tips that can help you build a life without debt and with assets:
- Take a good, hard look at where you stand financially today. What is your monthly income? The second step is to determine how high your monthly costs are. Fixed costs include your rent, electricity, telephone, savings, health insurance, food… Your variable monthly costs include, for example, your annual insurance premiums, vacations and special expenses. Be very precise in your analysis!
- Don’t buy things that you can’t afford today. The only exception, for me, is buying property.
- Cancel the overdraft facility on your account! There are studies that show that almost everyone uses an overdraft facility at some point.
- Don’t use credit cards unless you really need to, for example, as a deposit for a rental car. Most credit cards are billed monthly. Then, suddenly, it’s payday… You often lose sight of it because it was a few weeks ago. You are taken by surprise and may then have a problem.
- If you have the feeling that you absolutely have to have a certain item, then make sure to wait 24 hours before you buy it in real life or online. I call this method “Wait 24hrs Honey”. This saves you from unnecessary spending because the next day the “I absolutely have to have this” feeling is only 20% as strong and you are very unlikely to make the purchase that was so important the day before.
- Put the money you save in an extra box or account and see how much you have saved after six months.
- Inform yourself in detail before you conclude financial contracts and only conclude them if you understand them!
- Consistently put a fixed percentage of each income (salary, bills, special payments, birthday money, etc.) into a separate account, for example, 10 to 15 percent.
What other insider tip can you tell us about saving money?
It’s not that difficult. When it comes to small change, I recommend emptying your wallet of your coins every day and using them to feed your piggy bank. After a year, you’ll be surprised how much you can fit in its little belly. We often strive for the big things and forget the small ones. And pay for everything in cash! So you can see how much you really spend each week. This makes you much more conscious when you spend because you can feel it directly. Financial education should definitely be an integral part of school education! We founded Schulgold to bring the topic of financial education into schools. Schulgold is a digital learning platform for students that is used by teachers in the classroom. We are passionate about what we do because we are deeply convinced that financial education will advance our society.