We mustn’t fail kids on finance

Money education for the nation is vital investment

This was A-level results week and Thursday will be GCSE results day, measuring children on their ability to pass exams.

It can be a very tough time for many children, and it seems unfortunate to grade them at such a young age on subjects they may never need.

Instead, I’d like the curriculum to be updated. Our financial world is more complex than ever, yet we still don’t teach our children how to handle it.

We’re all able to buy shares in companies from around the world at a click of a button and make peer-to-peer lending investments via an ISA, all without a word of financial education.

How financially aware are we?

According to the OECD/INFE 2016 Survey of Adult Financial Literacy, adults in the UK score almost exactly in line with the average of 30 countries, against an internationally agreed set of questions.

This puts the UK 15th in the ranking against the 29 other countries that took part in the survey – just above Thailand and Albania, but below the average for OECD countries… and well below France, Norway and Austria.

In 2019, a financial capability survey of children, young people and their parents was repeated. It found that, overall, children had a reasonable grounding in knowledge and understanding about money.

They recognise some financial products and concepts, and know money has a value. However, compared to the 2016 survey, fewer parents were setting rules around debt.

It also found that 37% of children between seven and 17 save monthly, and 63% have a bank account of their own. Children who never save are least likely to be confident in managing their money (only 28% of those who never save say they are confident, versus 63% of those who save very regularly).

More than just money

My grandma Shute would say: “It’s not how much you earn that counts, it’s what you do with what you earn.”

Good financial habits are like manners or a balanced diet – you use and benefit from them, or you ignore them completely.

It is very reasonable for a young adult venturing into the workplace to save and retire with a pension of more than £1million – but if they are never shown how to do this, then how do we expect them to achieve it?

But it isn’t just retirement plans. Research from German bank N26 found that about 9.5 million UK adults have suffered from mental health issues due to financial anxiety.

Almost a third of those struggle to sleep. Managing your money is both a logical process of knowing what to do, and also a habit you need to learn.

This is why I wrote The Money Plan, my Student Survival Guide, and why I share my easy-to-follow tips here and at warrenshute.com.

For more financial information, search for The Money Planner podcast.