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Why we need financial education in schools

TraceyBleakley
by Lovemoney Staff TraceyBleakley on 30 January 2013  |  Comments 7 comments

Guest blogger Tracey Bleakley of the Personal Finance Education Group (pfeg) explains why financial education needs to be part of the national curriculum as a matter of urgency.

Why we need financial education in schools

Last week, financial education charity pfeg (Personal Finance Education Group) announced an exciting new partnership with Experian to transform 20 schools in some of the country’s most financially disadvantaged areas into Centres of Excellence in financial education. This is the first stage in a significant expansion of our Centres of Excellence programme, which will see financial education embedded in hundreds more schools across the country. 

This initiative, and others like it, comes at a crucial time.

Today’s generation of school-leavers face arguably the worst set of economic circumstances of any generation since the Second World War.  While we have seen unemployment as a whole fall over the last few months, the number of 16-24 year olds out of work actually rose in January by 1,000 to 957,000. 

Those young people lucky enough to be in employment are facing a combination of high rents, rising transport costs and squeezed wages.

Five years on from the start of the financial crisis, the fact that we are in difficult economic times is nothing new – but the particular challenges facing young people today means that the issue of how we can give young people the best possible start in life has never been more topical. 

Financial education is absolutely central to achieving this goal – and yet without a place in the curriculum, the teaching of this vital life skill is in short supply.

Making informed decisions

School-leavers are faced with a vast range of personal financial decisions for which too many of them are not being adequately prepared. How do I set a budget? What do I need to do to save enough for the future? How do I check my payslip is correct? Where should I go if I need advice? 

All of these questions, and many more, require a level of knowledge and skill that our education system is largely failing to provide.

At pfeg, we believe financial education should be taught in all schools and colleges, from the age of four right up to 19. Learning how to manage money on a day to day basis is a crucial life skill – but financial education should go much further than this. We believe that becoming a critical consumer, managing risk and your emotions when making financial decisions, and relating money matters to the rest of your life are just as important.

We need every young person to gain the skills, knowledge and confidence they need to be able to manage their money and make informed financial decisions. This includes learning the difference between ‘needs’ and ‘wants’, how to interpret financial information and how to set and stick to a budget. Managing credit safely, understanding the role of insurance and weighing up risk and reward when making financial decisions – and many other topics – are also crucial in preparing young people for life.

The time to act is now

This is a campaign that has widespread support. A 2011 survey of teachers showed that 94% agreed that financial education should be taught in schools. A similar proportion of school-age children polled in a survey last year said that they think every school pupil should be taught to manage their finances. 

We already work with tens of thousands of teachers who are working hard to impart these vital life skills on their pupils. 

In Westminster, the All Party Parliamentary Group (APPG) on Financial Education for Young People has now grown to 250 MPs and Peers from across the political spectrum.  The group, for which pfeg provides the secretariat, is leading the campaign for financial education to be included as a compulsory part of the national curriculum – something the Government has pledged to consider as part of its National Curriculum Review.

That Review is due to report any day now – and we await its conclusions with baited breath.  This is a unique opportunity for the Government to make a real and lasting difference to the financial capability of the UK. 

Financial education has the power to transform young people’s futures – and in these difficult economic times, it has never been more needed.

Tracey Bleakley is chief executive of the Personal Finance Education Group (pfeg).

Is Tracey right? Do we need to incorporate money lessons into the national curriculum? Do we need to do more to ensure young people understand how finance works when they leave education? Let us know your thoughts in the comment box below?

More from Lovemoney:

Charity ends schools education partnership with payday loans company

The skill every child should be forced to learn

Why personal finance in schools will fail

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Comments (7)

  • Arblaster
    Love rating 43
    Arblaster said

    Sounds fine, but...

    Two questions:

    (a) Who is going to teach this subject?

    (b) More to the point - What are they going to teach?

    But some of the things I hear about financial education is frightening. Take for example "There's Good Debt vs Bad Debt." As one superstar accountant once said: "Good Debt? Bad Debt? Debt is debt." Which of these two are they going to teach our kiddies?

    Are they going to teach the kids that inflation is rising prices? And what can you do to defend your nest egg against inflation? Buy index-linked certificates? Oh, they're aren't any anymore. There are ways of defending yourself against inflation, but to teach the kids those, you would have to tell them that inflation is the Bank of England creating phantom money out of thin air. The government won't let you do that.

    And are they going to tell them about taking out a private pension so as to take advantage of the tax breaks without telling them that right at this moment the US government are trying to get their hands on the assets in people's 401(k)s, and replace them with government bonds that are about to dive like a Stuka?

    The more I think of it, the more I think it would be better to leave the kids in ignorance. That our youngsters' natural cynicism would be the best defence against being missold a financial pig in a poke. They would be better taught nothing at all than be indoctrinated by bad information.

    One last question. If someone gets ripped off as a result of doing something they learned in one of these classes, will they be able to sue the school for compensation?

    Report on 30 January 2013  |  Love thisLove  0 loves
  • Mike10613
    Love rating 626
    Mike10613 said

    This is a good idea as long as the curriculum isn't politically motivated or sponsored by a company out to make money. Will kids be taught how to be a card tart by the likes of Martin Lewis? Will they be taught how to select the best way to borrow. I read a article on this subject this morning by a writer who pushes pay day loans. Will kids be taught pay day loans will help them out until pay day? Will children be taught about shorting on the stock market and speculating in FOREX as an easy way of making money and other dubious practices?

    I agree with financial education but it has to be done carefully. Maybe the next generation will realise the true cost of having kids and have less? But if this generation hasn't worked that out yet. Who will teach them?

    Report on 01 February 2013  |  Love thisLove  0 loves
  • PDB11
    Love rating 75
    PDB11 said

    Some good points from both Arblaster and Mike. I was afraid I would see a "financial education is the responsibility of the parents" debate, but this hasn't happened yet.

    Nonetheless, since I'm here, I'll try and pre-empt this debate by saying:

    All education is the responsibility of the parents, or, when the kids get older, of the kids themselves.

    Parents wanting to educate their kids have a choice: do it themselves; use a free service provided by the Government; or buy the service from an independent provider. For most parents, the free service provided by the Government is the only option they can afford; for many, it's the best value for money anyway.

    The free service provided by the Government - state education - is there to provide what the Government regards as the best for the country. This means a workforce with a reasonable education, and opportunity for all to progress into tertiary education if that's of value. This should be, but isn't always, what's best for the students as a body; it is not necessarily what's best for the students as individuals.

    Seen in this way, it makes ample sense for the state education system to teach things like household finance (something I never got in those lessons euphemistically tagged "home economics"!)

    Who will teach them? One hopes, people with accountancy qualifications, since accountants seem to know better than economists the difference between accountancy and economics...

    Report on 01 February 2013  |  Love thisLove  0 loves
  • sodit
    Love rating 135
    sodit said

    Come on, our rulers make their money from the City. Do you seriously think that they want their prey to know how their swindles work? It's bad enough the internet blowing the gaff to those who go looking for advice, heck, they really don't want it forced onto everyone in school.

    Report on 02 February 2013  |  Love thisLove  1 love
  • Arblaster
    Love rating 43
    Arblaster said

    Come on, our rulers make their money from the City. Do you seriously think that they want their prey to know how their swindles work? It's bad enough the internet blowing the gaff to those who go looking for advice, heck, they really don't want it forced onto everyone in school.

    Yes, that's the sort of thing I had in mind. The stuff they will be teaching our kids will be the usual rot that the media trot out. Get a mortgage,and flip your house. Get a pension. Inflation is rising prices, and it is an Act of God. The stock market is at record highs. Buy! Buy! etc. And you can get a teacher in, say, geography, to take a course and become qualified to teach this subject, even though he/she is a paycheque away from ruination.

    And, as you say, they don't want the kids - or anyone else, for that matter - watching Max Keiser or Peter Schiff or streetmoney21 on YouTube, and knowing how the wool is pulled over people's eyes to rip them off. For example, I have just been sent an email to show how the S&P 500 is now as high as it was in 1999. Fortunately, the people who sent me the email are the good guys. The diagram had a red diagonal line to say that the price of the shares had been devalued due to inflation by 36 percent, and I'll bet they used the official inflation figures to calculate that!

    Report on 04 February 2013  |  Love thisLove  0 loves
  • tuttogallo
    Love rating 99
    tuttogallo said

    Of course personal finance should be taught in schools. Most pupils will leave school not even knowing what compound interest is, let alone how to calculate it. This makes it very easy to get caught in spiralling credit card debt.

    Report on 17 February 2013  |  Love thisLove  0 loves
  • EAM51
    Love rating 0
    EAM51 said

    This thread seems to have died 6 months ago. The need to teach personal finance in schools and colleges is not new - I taught and latterly managed the Business and Finance department in a local college for 25 years and this has always been a theme of mine. I am an accountant.

    It is amazing how little business studies undergraduates understand about the world of finance but even more amazing how little colleagues in other departments understand. Part of the problem though of trying to do this in schools is to ensure there are sufficient teachers who understand the issues from a 'Good housekeeping' perspective - been there, done it, reflected on it. The subject needs to be alive and illustrative but not controversial so that it does not cut across parental actions or situations.

    I have recently married for the second time and was staggered to find that my new husband - although a very clever scientist and mathematician - didn't understand compound nterest in relation to a mortgage.

    I feel very strongly the need for this subject to be taught (well) and would happily join Tracey's group to promote it.

    Report on 02 August 2013  |  Love thisLove  0 loves

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