Financial education is joining the national curriculum next year, but it’s not just up to schools.
They may not be allowed to vote, drink or drive, but the UK’s under 18s are making important financial decisions and developing money habits, both good and bad, from a surprisingly young age – and without any formal money education.
As thousands trudge back to school after the summer break, they may not be guaranteed even the most basic guidance right now but financial skills will finally be incorporated into the national curriculum in 2014. Only time will tell if it encourages a more financially responsible generation.
So how can you give your children a head start?
Leading charity pfeg (the Personal Finance Education Group) has long been campaigning for financial education in schools, highlighting the dangerous gaps in the knowledge of young people.
The group has uncovered widespread misunderstanding of many basic principles of money management among 14-25 year olds.
Nearly half cannot interpret bank statements and the difference between being in credit and overdrawn, while more than one in four don’t know that a lower APR (annual percentage rate) is more attractive than a higher one when taking out credit, its research has found.
Research has also shown that adults exposed to financial education in school accumulate greater wealth and are more likely to save for retirement, therefore proving less of a burden on taxpayers in later life. The Centre for Economics and Business Research found that a lack of financial education is a huge drain on the wider economy, costing £3.4bn a year in debt, mis-sold financial products and issues such as unemployment and retirement provisions.
Financial education couldn’t be more relevant today – young adults have access to more forms of credit than their parents’ generation ever had and many will leave university with huge levels of debt.
The move to bring in financial education as part of the compulsory national curriculum, starting in September 2014 in England, is a crucial step. The new programme covers financial mathematics, while the decision-making aspects of finance will feature in citizenship lessons.
At key stage three children (ages 11-14) lessons will cover the functions and uses of money, the importance of personal budgeting, and managing risk. At key stage four (ages 14-16) lessons move on to cover income and expenditure, credit and debt, insurance, savings and pensions, as well as a range of other financial products and services.