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Why do we assume that young people will get the hang of money without any help or guidance? These uncertain economic times highlight that we need proper personal finance education more than ever. I highlight the few schemes that are leading the way and make the case for a curriculum rooted in the real world
Money and sex have exactly the same effect on people, argued the great American novelist James Arthur Baldwin. “You thought of nothing else if you didn’t have it and thought of other things if you did.”
But today’s schoolchildren only learn about one of those topics, and what they know about the other could be written on the back of a condom packet.
Mr Baldwin’s words ring true when you look at today’s younger generations. They are obsessed with their financial affairs, but few have the information – and so the confidence – to make the right decisions when it comes to money.
That is because they aren’t given proper guidance and education from a young age. They aren’t necessarily told how to save their money properly and spend whatever money they have wisely.
Thinking back to my recent schooldays in Scotland, while I pretty much accept the value of the curriculum we were taught, I do remember long and occasionally grisly sessions on sex education – but nothing about money.
So three cheers for Martin Lewis’s petition for compulsory financial education for young people, which reached 100,000 signatures this month. That means it can be considered for a debate in Parliament. There is already an all-party parliamentary group on financial education for young people, which has 250 MPs and has called for compulsory money lessons. The petition also has the support of consumer groups such as Which? and the Consumer Credit Counselling Service.
Martin Lewis says: “We’re a financially illiterate nation, with millions caught by mis-selling, over-borrowing and being ripped off. The easiest, cheapest and most important fix is to get financial education in every school. Unless it is compulsory, head teachers can’t focus resources to make it happen.”
The government seemed to be taking this mission on board, with the launch of the new Money Advice Service earlier this year. I interviewed its chairman Gerard Lemos for this blog back in May, and he told me then that the new organisation was developing a service targeted at young people, and watch this space.
But last month, Money Marketing revealed MAS was taking an axe to staff numbers. It said over three-quarters of the 150 staff had been put on consultation, including its team focusing on young people, following a “review of its products, services and delivery channels”.
In July, financial secretary Mark Hoban gave MAS the task to review the provision of financial education in schools and for young people, Money Marketing reported. Hoban has apparently written to MAS to voice his concern that this work will be scrapped.
The report went on to quote “a source close to the organisation” as saying MAS plans to recruit 50 new staff with social media and digital skills next year to focus on delivering its service via its website. MAS was launched in April and is funded by a statutory industry levy.
The Personal Finance Education Group (PFEG) charity says 93% of teachers and parents think that personal finance should be taught in schools and 66% of adults believe money lessons would have helped them cope better with today’s financial challenges.
According to PFEG, kids typically now get pocket money at seven, their first mobile at eight, and are starting to buy their goods online at the age of only 10.
And yet they are a bit foggy about where money comes from. A recent Halifax survey of children found that 55% understood that money comes from working, 30% said it came from the bank, and 18% said from the government – rising to 29% in Scotland. One in 20 children believed the tooth fairy dispensed cash, and 2% said money really did grow on trees (4% in London!)
As we wait for personal finance to arrive in the curriculum, banks and other financial organisations continue to fill some of the gaps as part of their community programmes.
Clydesdale and Yorkshire banks run ‘Count Me In 123’, an award-winning children’s numeracy programme operating in libraries across Scotland and England. Clydesdale has also created ‘Talk Money Talk Solutions’, a teaching resource available to all of Scotland’s primary schools.
Nationwide Education, an offshoot of the building society, has built a range of financial capability programmes over the last few years, with resources designed for use on interactive whiteboards and PCs. This is a thoroughly modern campaign covering all ages from four to 18, including a thoughtfully-written Teenage Guide to Money.
NatWest and the Royal Bank of Scotland make much of their community credentials these days, but RBS started its Money Sense schools work back in 1994.
Glasgow Credit Union, which has more than 27,000 members, and works with primary and secondary schools on its outreach mission. It provides sessions for children aged three to 18, which aim to spark essential financial skills from coin-counting to budgeting.
Shares4schools, a national investment competition run by retail stockbroker The Share Centre, gives teenagers a taste of the stock market without the pain of losses – but with the incentive to win cash for their school.
Fund manager Baillie Gifford runs a successful annual Young Writers’ Competition in conjunction with the Financial Mail, which was set up to help educate young people about the importance of personal finance. The competition is now in its 6th year and is open to in two age categories, 13-15 year-olds and 16-18 year-olds, there are some great prizes on offer this year, including an iPad and work experience with the Financial Mail. More information on this year’s competition can be found here.
PFEG says money in the core curriculum would mean “a new generation of adults emerging in a much stronger position to better tackle the often baffling array of financial deals flung at them”. So what are we waiting for?