OpinionMar 28 2023

'Practical support needed in schools to better financial education'

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'Practical support needed in schools to better financial education'
Two-fifths of secondary school teachers are not aware that financial education is a national curriculum requirement. (FT Money)
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The recent report from the all-party parliamentary group for financial education has found that the UK continues to undervalue the power of financial education and its potential benefits to young people and the wider economy. 

As secretariat to this report, we have seen first-hand at Young Enterprise the desire of young people to learn about managing their money, but with only 38 per cent recalling having done so in school more needs to be done to address the barriers that currently exist.

Across the UK, less than half (44 per cent) of young people aged 11 to 17 feel confident managing money. It’s also an issue that is echoed across the rest of the population, with 45 per cent of adults saying they do not feel confident managing money.

Furthermore, two-fifths of secondary school teachers are not aware that financial education is a national curriculum requirement despite the subject being mandatory for secondary schools since 2014.

We know that many schools and teachers consider learning about money a key life skill and important to young people’s futures, however there can be significant challenges building this into the school curriculum.

Against the backdrop of a rising cost of living, financial education has never been more important.

Through feedback from more than 400 teachers, the APPG report has identified these barriers and made a series of recommendations to help overcome them and support schools in the delivery of this much needed area of learning.

What is clear from the report’s findings is that more support is needed and that this support should be both structural and practical. Teachers need more guidance on how financial education can support other areas of the curriculum as well as their whole school priorities. 

There is also a need for greater accessibility of resources that can be differentiated to the needs of their young people and their unique settings.    

We need to reframe the notion that financial education is just about adding up and recognise the role of financial education as an enabler and opportunity-maker for young people.

A report from UCL stated that the financial skills of 15-year-olds from socio-economically disadvantaged backgrounds are similar to 11-year-olds from more advantaged backgrounds. Clearly, we need to work together to make sure this gap is eradicated.

Improved financial education also brings financial benefits to wider society. According to research by the Confederation of British Industry and GoHenry, prioritising financial education could add an extra £6.98bn to the UK economy each year, equivalent to £202bn by 2050.

Removing the barriers

How can we remove the existing barriers preventing young people from accessing financial education?

It starts through educating children while at primary school when they are forming their mindset with money, shaping their financial capability into young adulthood and beyond.

This is especially important following research from Cambridge University that has found that children’s mindset around money habits are set by the age of seven. Building strong money habits from a young age will ensure the next generation can develop a healthy relationship with money, best preparing themselves for their future careers. 

We need to teach children about the difference between needs and wants when it comes to money, the importance of budgeting and saving, and how to borrow and make investments. Understanding the real-life implications for personal debt, understanding interest rates and how to compare market offerings helps people form a deeper, more practical financial mindset from a young age.

Against the backdrop of a rising cost of living, financial education has never been more important.

According to Santander UK, two-thirds of young people believe that a lack of financial education has led them down the path to debt.

While financial education should never be positioned as a way of addressing the causes of poverty, which are both complex and wide ranging, poor financial capability has been proven to negatively impact an individual’s life chances as well as their wellbeing. 

We need to take urgent action and ensure support comes in the form of both structural and practical interventions.

With inflation continuing to rise, the budgets of many British households are under strain. This has led to a rise in financial vulnerability and a subsequent increase in financial scams. A report from the Financial Conduct Authority has found that investment scam reports have risen by 193 per cent in five years.

Most of these scams prey on the incentive to 'make money quickly' and encourage young people to invest in something with the promise of easy returns. Better financial education can enable the next generation to make informed financial decisions instead of trusting advice from unregulated social media influencers, which is not always accurate. 

The position of the APPG report could not be clearer: more support is needed to deliver high-quality financial education.

To progress the report’s findings, we need to take urgent action and ensure support comes in the form of both structural and practical interventions; in particular, Ofsted, the schools inspectorate in England, conducting a series of deep dives into financial education provision, highlighting good practice and ways in which some schools have overcome the barriers that have been identified by the APPG. 

Such reports from Ofsted would go a long way to supporting other schools on their implementation of high-quality financial education. Implementing action can make a step change in the financial capability of our youngest generations for years to come.

Sharon Davies is chief executive of Young Enterprise