We must improve financial education in schools

When I was at school in the, er, 1980s, there was no such thing as financial education. Yes, we had maths lessons but they focused on the hypotenuse and mastering scientific calculators. I still break out in a sweat at the thought of trigonometry. Since my day (when all this was fields etc etc), the curriculum has changed significantly. No more Home Economics – I think it’s called Domestic Science now – and I’m guessing that ballroom dancing has been replaced by something altogether more modern. I also suspect that the fledgling word processing lab at my high school has morphed into a 21st century cutting-edge centre where coding lessons are commonplace. Given the pace of change over recent decades, I’m wondering why finance is still so neglected in the classroom? We’ve embraced all kinds of facets of educational progress, why not practical money matters? New research out today from the Money Advice Service paints a bleak picture. Released to mark the launch of the first ever Financial Capability Week (designed to raise awareness of the importance of money management), the data shows that just four in ten young people in the UK say they’ve received financial education, even though it is part of the curriculum.

In addition, the survey shows that only 7 per cent of children have taken the time to speak to their teacher about money.

There is an issue outside of the classroom too, with under two thirds of parents admitting that they feel confident talking to their children about money, and only a third involving their children in discussions about household finances.

The repercussions of this lack of financial education can be serious – and last a lifetime. If you receive little or no guidance on finance before adulthood, it can mean you’re poorly prepared to manage money later on. The Money Advice Service’s research goes some way to support this theory. The organisation says that among 16 to 17-year-olds, 32 per cent said they didn’t have experience of putting money into a bank account, 39 per cent said they didn’t have a current account at all, and a worrying 59 per cent couldn’t read a pay slip.

Now, I know what you’re saying. Financial education didn’t exist when we were at school and we did OK. But is that really true? Levels of over-indebtedness are at record amounts, regular overdraft use is rife among people with problem debt, and payday loan companies – which charge exorbitant rates of interest – are doing great business. Added to all this are figures from the StepChange debt charity which says that the number of people seeking help with debt problems hit a record high in 2016. And who are those most likely to be affected? Younger borrowers.

So, what do politicians think about all this? Suella Fernandes MP, chair of the All Party Parliamentary Group on Financial Education, said: ‘These research findings [from Money Advice Service] clearly show that there is plenty more to do to improve the delivery of financial education, which remains inconsistent and varying in effectiveness. It’s essential that we provide appropriate training and resources for teachers to enable them to deliver these crucial lessons.

‘A collaborative approach is absolutely vital in tackling this issue – we must encourage educators, policy makers and other organisations to work together to deliver effective financial education to our children. The All Party Parliamentary Group on Financial Education for Young People has recommended the Department for Education embed financial education within the new Initial Teacher Training framework. In order to ensure high quality provision schools should appoint a financial education ‘champion’, ideally a member of the Senior Leadership Team, to coordinate and promote learning and training in this area.’

David Haigh, director of financial capability at the Money Advice Service, added: ‘The fact that only 40 per cent of pupils reported receiving financial education show that gaps exist in the provision of financial education. Given that so few children actually speak to their teachers about money matters, there’s a clear role for parents to fulfil in helping prepare their children to manage their money in adult life. However, we know that only one-third of parents talk to their children about household finances.

‘In addition, parents’ money management may not set the best example. Half do not save regularly, 44 per cent say they don’t feel confident managing their money and 68 per cent say they find keeping up with their credit commitments and bills a burden. In order to find a lasting solution to the problem of the UK’s stubbornly low levels financial capability, we need to help parents be better role models, build their confidence in speaking to their children about these matters and support schools to deliver effective financial education.’

Helen Nugent is Online Money Editor of The Spectator