Last week the Joseph Rowntree Foundation released a report, Monitoring Poverty and Social Exclusion 2016, which revealed that more than seven million people in the UK are living in poverty, despite being part of a working family.
Among the identifiable factors behind these figures were the rising costs of private renting, stagnating wages and cuts to benefits, with Helen Barnard, head of analysis at the foundation saying that ‘the economy is not working for low-income families’.
As a financial education charity, we would offer another important factor – stubbornly low levels of financial literacy, which affect families from across every social stratum. The effects of this are all around us, from spiralling personal debt to falling savings levels. In the worst cases, it can lead to complete financial exclusion.
It is a fact of life that good consumers build a good economy, so in order to address these problems we believe there needs to be a complete overhaul of how our society approaches financial education, and a shift in emphasis in how it is perceived and provided through formal education.
It was only in September 2014 – some six years after the financial crash – that financial education was finally incorporated into the national curriculum. That it was to be delivered through Citizenship and Maths has been the cause of much contention, not least because two years later the All Party Parliamentary Group on Financial Education for Young People felt it necessary to publish eight further recommendations to ensure that, as a subject, it is delivered consistently and effectively in schools and colleges.
Chief among these recommendations was the need to improve teacher confidence and skillsets (the parliamentary report identified that fewer than 20 per cent of teachers have received training in this area). Our own findings support this, with research from our Young Persons’ Money Index revealing that only seven per cent of students currently receiving financial education in school say that their teacher is their main source of information. To put this into context, only 2 per cent of these students say they have had a conversation with their teachers about money, compared to 14 per cent who said they regularly converse with their friends on the subject.
(Young Persons’ Money Index: Where do you receive the majority of your financial understanding?)
This is not, of course, to denigrate the efforts or appetite of teachers to deliver the subject. Indeed, through our work, we know there is a real hunger from teachers to receive the support to provide effective financial education.
But with formal financial education only two years old, the majority of teachers will have completed their own studies without ever learning about the subject themselves. When you factor in crowded curricula, a lack of resources and a variety of conflicting pressures, what hope do we have in ensuring a rounded financial education?
Nevertheless, through our work in schools we can see first hand the very real impact that trained, confident and dedicated teachers of financial education provide. I was struck recently by this when I sat in on a financial education lesson of normally boisterous class of 15 to 16-year-olds – they listened in total silence and absorbed the importance of what they were learning. Their teacher explained: ‘It’s important to be informed about your finances. We don’t want you to lose your homes, or not be able to afford a quality of life that is fitting in retirement. We want you to have a job you enjoy and ensure that you can handle your money sensibly. We want you to be rich, not necessarily in a monetary sense, but because you’re in control.’
That is the crux of the matter, and will ultimately lead to rising levels of financial capability; empowering teachers with the confidence and resources to put our young people – the next generation of consumers – in control. If we get it right, financial education is more about teaching questions than answers. It is about teaching our children how to think about money so they know the right questions to ask and where to get the answers, not necessarily telling them what the answers are. If we do this, then in the foreseeable future we can hope to address the problems set out by the Joseph Rowntree Foundation and get the economy working for everyone.
Alison Pask is Managing Director, Financial Capability & Community Outreach, at The London Institute of Banking & Finance
For more information on financial education, please visit: www.libf.ac.uk/financial-capability
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