Research suggests teenagers are ‘ill-prepared’ in money management
Less than half of young people aged seven to 17 are receiving financial education at school.
Financial education is designed to teach children how to handle their finances confidently and is currently part of the curriculum across the UK.
However, just 4 in 10 young people in the UK say they’ve received financial education, according to new findings by the Money Advice Service, released at the launch of Financial Capability Week 2016.
This is despite the fact that an overwhelming 90% who’d received financial education lessons said they found them useful.
In addition, the survey findings showed that only 7% of children surveyed said they’d taken the time to speak to their teacher about money.
There is an issue outside of the classroom too, with only 61% of parents admitting that they feel confident talking to their children about money and with only one-third involving their children in discussions about their household finances.
When young people don’t receive financial education, it can mean that they’re poorly prepared to manage their own money as they approach adulthood. The research clearly demonstrates this – among 16 – 17 year olds, 32% said they didn’t have experience of putting money into a bank account, 39% said they didn’t have a current account at all and a shocking 59% couldn’t read a pay slip.
The first ever Financial Capability Week, from Monday14 November, aims to raise awareness of the importance of financial capability – that is, people’s ability to manage their money well, both day-to-day and through significant life events, such as losing their job, having a child or suffering a bereavement.
Suella Fernandes MP, Chair of the All Party Parliamentary Group on Financial Education, said: “These research findings clearly show that there is plenty more to do to improve the delivery of financial education, which remains inconsistent and varying in effectiveness. It’s essential that we provide appropriate training and resources for teachers to enable them to deliver these crucial lessons.
“A collaborative approach is absolutely vital in tackling this issue – we must encourage educators, policy makers and other organisations to work together to deliver effective financial education to our children. The All Party Parliamentary Group on Financial Education for Young People has recommended the Department for Education embed financial education within the new Initial Teacher Training framework. In order to ensure high quality provision schools should appoint a financial education ‘champion’, ideally a member of the Senior Leadership Team, to coordinate and promote learning and training in this area.”
David Haigh, Director of Financial Capability at the Money Advice Service, said “The fact that only 40% of pupils reported receiving financial education show that gaps exist in the provision of financial education. Given that so few children actually speak to their teachers about money matters, there’s a clear role for parents to fulfil in helping prepare their children to manage their money in adult life. However, we know that only one-third of parents talk to their children about household finances.
“In addition, parents’ money management may not set the best example. Half (50%) do not save regularly, 44% say they don’t feel confident managing their money and 68% say they find keeping up with their credit commitments and bills a burden.
“In order to find a lasting solution to the problem of the UK’s stubbornly low levels financial capability, we need to help parents be better role models, build their confidence in speaking to their children about these matters and support schools to deliver effective financial education.”
Samantha Seaton, Managing Director of Momentum UK (Retail) and Moneyhub, said:
“Money management is a critical skill and can significantly affect a person’s quality of life, yet most teenagers learn very little about money from their school syllabus or even from their parents. This means that many people in their twenties are unaware of the impact of their financial decisions just as they’re beginning to make important life choices.
“This needs to change and the best way to address the issue is by bringing financial education into schools. The subject also needs to be made more accessible and appealing to young people through the use of technology, games and even apps.”
Elona Gega, a student from London who received financial education through a scheme provided by financial education charity MyBnk, benefitted from receiving financial education. She said: “Money is real to me now! Learning how to manage it and avoid bad debt has improved my confidence, cut my spending and opened up new opportunities. I have just started living independently and want to go to university, it’s really important I know how to take care of my finances. Today, I feel like I’m in control of my money rather than it being in control of me.”
Russell Winnard. Head of Educator Facing Programme and Services at Young Enterprise, said: “Collaboration between organisations is absolutely vital to ensure that young people receive high quality financial education. By sharing information on effective approaches, the way in which financial education is delivered can change for the better. The Financial Education Quality Mark is an accreditation awarded to teaching resources that are accurate, engaging and of the highest standard, to allow educators to identify the best financial education materials.
“Today, we launch a revised version of the Quality Mark – the new version will support providers in evaluating how effective their resources are and share their findings with others. Doing so provides the opportunity to create the most effective, consistent financial education resources, thereby improving the standard of financial education for children across the UK.”