A school reform that could actually help the economy? Teaching financial literacy
It’s not just students who would benefit from school reforms to teach financial literacy, but the UK economy, writes Quentin Nason
“I wish I’d learned this at school”. If there was one phrase to summarise my conversations with adults about financial education, this would be it.
The government is in the midst of a major review of the UK school curriculum – a system which the education secretary Bridget Phillipson herself said “fails to prepare enough of our children for work and for life”. One of the most glaring gaps they will need to address is financial education.
How do schools currently approach financial education?
Having founded a financial education charity myself – one which has delivered sessions to tens of thousands of school pupils – I understand the scale of the challenge the government faces.
While financial education was introduced into the school curriculum 10 years ago, it is only mandated in secondary schools in England not primary (and each of the home nations takes a slightly different approach). Even in secondary schools, provision is piecemeal, and many children report never receiving sessions at all (despite studying the Tudors on multiple occasions).
It is also a subject which, as the APPG on Financial Education for Young People found, teachers lack the confidence to deliver – reminding the producers of this curriculum that we need to find ways to empower teachers themselves.
A big part of the problem is the fact that, unlike maths, English and other statutory subjects, children’s understanding of financial education is not tested or measured. With so much pressure on teachers to deliver top-tier grades, it’s unsurprising that the subject is brushed under the carpet.
Why financial literacy benefits all of us
But while constraints on teachers are significant, we cannot overlook the societal importance of better financial literacy.
Research by Abrdn, the investment company, shows that if you have two people on a similar salary – one with good financial literacy and one with poor financial literacy – the former is much more likely to have savings and a pension. Even more concerning, it found that two-fifths (44 per cent) of UK adults suffer with poor financial literacy.
Low financial literacy is harmful for individuals, decreasing their financial resilience. But it’s also harmful for the economy – increasing the likelihood that a person will end up reliant on the state or in problem debt.
Those of us who work in the City and want to attract the next generation of talent from all socioeconomic corners of the country should be even more concerned about the lack of financial education in school. Young people won’t apply for jobs they don’t know exist or choose to work in the financial sector if their only impression is one of mistrust.
How individuals can help
The role of the state in solving this problem is significant, but there are things we as individuals can do. Children like to talk about money. We as parents could easily weave in concepts of financial literacy into many of our daily activities whether that be doing price comparisons in the weekly grocery shop or talking about entrepreneurship and what makes a good business while buying croissants at the local coffee store.
While it is unhelpful to pit one school subject against another, I would urge the government to put a greater emphasis on this crucial life skill in its overhaul of the curriculum.
More than half of US states now mandate that young people take financial literacy lessons to graduate from high school. As children come of age in an ever more complex financial world, one in which they may never touch physical money, the UK should strive to follow the lead of countries like the US to empower young people and help them make educated choices.
Because, as the golden rule of compounding teaches you, a small investment today can pay off enormously in the future.
Quentin Nason is the founder of City Pay it Forward