Financial education essential to prepare pupils for working life
FINANCIAL EDUCATION is vital and the sooner it is taught, the better to understand money in life. Yet so few schools have a proper programme and devote sufficient time to the subject.
With only one-third of parents discussing money with their children, schools have to step in to fill the gap. Yet many are neglecting this vital area with 60 per cent of seven-17 yearolds admitting they have had no financial education.
In research by private client broker The Share Centre, 98 per cent of personal investors revealed they left school with a lack of financial understanding.
The learning can start under five with Yorkshire Bank’s numeracy programme, called Count Me In 123.
It is an online resource that features a host of fun games, activity sheets and stories created for parents and carers to enjoy with their child while helping them learn mathematical skills.
The focus is on number recognition, shapes and pattern, size, measurement and counting. Yorkshire Bank says the programme should nurture the building blocks of early maths skills crucial to later success.
Primary schools should be the next stage to lay the foundations which are then developed at secondary level. “If you think subjects like ‘pound cost averaging’ and compounding are too complicated for young people, think again,” says Justin Urquhart Stewart, co-founder of Seven Investment Management and known to TV viewers for his retro red braces.
The language can certainly be made fun. At secondary stage, investing at the top of the market is probably better understood when the term ‘herd-like’ behaviour is used, says Urquhart Stewart.
Money through the ages should be openly discussed. This means that in the year prior to leaving full-time education, any immediate financial requirements should be reviewed – such as insurance for a first car – but also longterm needs, notably retirement planning.
Since 15m people have no pension, saving for later life is vital to understand. Youngsters need to know the difference between ‘defined benefit’ (where payments are guaranteed) and ‘defined contribution’ (performance-related payments) as well as why risk needs to be reduced as the pension age draws close.
Teachers, often supported by professionals in the financial field who are prepared to give their time free, can discuss a range of scenarios and how to cope. From the good money times, the not so good, bull markets, the credit crunch, taper tantrums, the eurozone crisis, the list can be long.
Even when simulated events are evaluated, making them worse than recent history, the moderately cautious investor runs out of money ahead of the balanced investor.
Years ago Yorkshire Bank ran school accounts with pupils taking such roles as manager and cashier and sometimes money for trips would be transacted this way. For overseas holidays, this meant pupils learnt about currency conversion.
Aware that there was a void at primary level, the Tax Incentivised Savings Association launched a programme in May with 16, now expanded to 20, leading savings and investment supporters. They include Aberdeen Asset, Alliance Trust Savings, Aviva, BlackRock and Prudential.
Known as KickStart Money, the initiative has £1m – largely from the Money Advice Service – to provide over three years for 18,000 primary school children aged seven-11 years.
The topics will include the value of money, where money comes from, prioritising spending, budgeting and saving. The organisers say this should provide a key pillar to help rebuild a national savings culture and create long-term financial resilience for future generations.
Money problems certainly affect the young with 52 per cent of teenagers going into debt by the time they are 17 and 96 per cent saying they worry about money daily.
Perhaps with such a culture, it is not surprising that 21m people do not have £500 in savings and eight million have debt problems.
Last month, Young Money announced it would issue 500,000 personal finance textbooks on a complimentary basis. Martin Lewis, founder of the moneysavingexpert website has given £200,000 for its writing and publication.
KickStart does not have any corporate sponsor branding. It is being handled by MyBnk which is an independent, financial education charity. In a decade, it has worked in 760 schools and youth organisations to help 160,000 youngsters to manage their money.
Young Money, formerly known as Pfeg, is the leading financial education charity, supporting the teaching of money matters and providing resources.
Thanks to corporate partners, there is no charge to any school, which can receive a £2,500 bursary for staff training and resources.
Financial education only became part of the national curriculum in September 2015. This was at secondary level as part of citizenship and maths. Yet, according to University of Cambridge research two years ago, money habits form from age seven.
As a sign of recognition for embracing the subject firmly into the curriculum, schools and colleges can work towards becoming a Centre of Excellence in financial education. Last month Doncaster College in Doncaster was the first to secure the award.
Doncaster College is one of 82 centres recognised for its work in financial education, along with 36 schools and other educational centres who are on the current programme.
The Spanish bank, Santander, which took over Alliance & Leicester, Abbey National and Bradford & Bingley, is funding 60 sites.
Santander runs a series of ‘Wise Workshops’ to help youngsters build their skills and knowledge in money, work and innovation. They start at primary school level.
“Our aim is to ensure that all students enter adult life with the skills, knowledge and confidence they need to manage money well and the partnership with Santander is helping to make this goal a reality,” says Michael Mercieca, Young Money’s chief executive.
Last year Young Money trained over 1,400 teachers. To achieve Centre of Excellence recognition, a key teacher needs to be appointed with day to day responsibility for driving quality personal finance education, a development programme needs to be well planned and head teacher support evident with effective teaching which can motivate pupils who need to be fully involved.
Community engagement in terms of links to other organisations locally should be seen and a willingness to use financial sector volunteers to add value.
Contacts: Chartered Insurance Institute 020 8989 8464, KickStart 01642 666999, Young Money 020 7330 9470.