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Financial education fails to add up for young people

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Financial education fails to add up for young people

Personal Finance

Financial education fails to add up for young people

Four out of five students say they are not taught enough practical money lessons in schools

© Getty Images/iStockphoto

What does this chart show?
You’ve heard of the Bank of Mum and Dad — but in many cases, it has an educational offshoot.

Nearly three-quarters of young people in the UK say they get most of their financial understanding from parents and other family members, according to the Young Person’s Money Index report from the London Institute of Banking and Finance (LIBF).

Although financial literacy has been part of the National Curriculum since 2014, just 8 per cent of young people said they learned the most about money skills in school, and 17 per cent said they were self-taught.

The LIBF finds this worrying. Not every parent will be able to educate their child about money matters and relying on advice from parents or being self-taught through the internet could potentially give young people the wrong advice. No wonder that 69 per cent of students polled said they worried about money.

Do young people want to learn about money in school?
Yes. The LIBF study found that the number of students who wanted to receive more financial education at school was very high — 82 per cent. They also said the provision of lessons was patchy — 18 per cent of those polled said they had been taught about personal finance in the past month, but 15 per cent said it was more than a year ago.

Financial literacy falls under citizenship education for local authority maintained schools — It is currently not required to be its own distinct lesson and is usually integrated into other subjects. Academies and independent schools have no obligation to teach it.

However, the Young Persons’ Money Index found that 64 per cent of young people said they had some access to financial education in the past year, compared to 29 per cent in 2015, a year after the curriculum was first introduced.

What the lessons consist of is a separate issue. A previous report from The Money Charity found that financial literacy taught in schools was “ineffective”. The all-party parliamentary group on financial education found that only 17 per cent of secondary schoolteachers had received training or advice about how to teach it.

What do students wish they were taught?
As you might expect, learning about the student loans system was a high priority. The majority (66 per cent) of students polled intended to take out a student loan, yet over 50 per cent of 15-16 year-olds said they did not understand how the student loans system actually worked.

The LIBF found that 87 per cent of young people want to know more about how specific financial products worked — including credit cards, savings accounts, mortgages and pensions. Just under 80 per cent said they had not received any information about how the tax system worked, 77 per cent wanted to be taught how to budget and 73 per cent wanted to learn more about debt management.

In total, 60 per cent of young people said they wanted to learn about money as part of a separate subject, rather than it being incorporated into other lessons.

How should schools be teaching financial education?
The LIBF is campaigning for financial education to be taught as a separate subject that is given regular time in the classroom.

“Many children get access to financial education but it is erratic and irregular,” said Heather Tilston, spokesperson for the LIBF. “Financial education should be included in Ofsted’s education inspection framework to focus teachers’ minds on the importance that should be placed on it and the time it deserves.”

Martin Lewis, founder of MoneySavingExpert.com, has personally funded a financial education textbook called Your Money Matters aimed at 15 to 16-year-olds, which has been sent to more than 3,000 state-funded secondary schools in England.

He has previously said that the campaign for financial education to be part of the curriculum was a “pyrrhic victory” as the government has put no resources in teaching it, and many schools were still struggling to do it well.

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