The following is a guest post. Enjoy!
Younger people have to make significant financial decisions these days, and acquire financial facilities such as bank accounts and debit cards at an earlier stage than previous generations did. With likely trends continuing into future years of increased life expectancy, uncertain economic and job prospects, and the already present need for students to manage their living costs and student loans when in further education, the need for youngsters to be financially aware is increasing.
A desire for financial education
Research undertaken by bodies such as the Personal Finance Education Group (pfeg), a body helping younger people gain financial skills, has revealed that over 60% of youngsters open a bank account before starting secondary school, and some 75% of 15 year olds with a bank account have a debit card. The pfeg also found an overwhelming number of parents and teachers, and young people themselves, thought financial education should be taught in schools.
The need for financial education
Along with managing savings and bank accounts from a tender age, young people very soon have to get to grips with heavier financial aspects such as managing a budget when studying away from home and dealing with student loans.
Judging aspects such as the best way to finance their mobile phone by understanding contracts and commitments, deciding when to borrow money, how much they can afford to borrow, and assessing the most appropriate loan sources for their needs are just some of the required financial skills.
The possibility of having to leave home at a young age for the right job, and organising what may be tight finances when renting and paying bills on a starter salary, are very real circumstances younger people have to face with career-specific jobs less likely to be found closer to home.
There are claims that consumers lose on average nearly £430 per year simply through misunderstanding financial terms and conditions or not studying them properly, and this could be at least in part blamed on lack of sound financial education at a younger age.
If nothing else, the principles of assessing financial products such as bank accounts, credit cards, loans and contracts would stand younger people in good stead. For example, if considering taking out a loan, youngsters would be shown how to assess the lender’s suitability for their requirements such as visiting their website and looking for key information such as their credentials and checking if they’re members of the FCA (Financial Conduct Authority), and how they operate perhaps by reading their ‘FAQ’ page.
Steps being taken
Unfortunately, due to pressures to deliver on other aspects of the ever-changing school curriculum, barely a third of primary schools offer financial education. That said, some headway has been made through the pfeg’s Centres of Excellence programme; as of April 2016, over 50,000 students had benefitted from some type of financial education and over 2,500 teachers had been equipped with skills enabling them to teach financial education.
All-party parliamentary groups have been formed in recent years to instigate financial education; in 2014 the Parliamentary Group on Financial Education for Young People was the largest all party group with over 200 members. Household name financial institutions were involved in providing training materials and actual lessons to young people in over 1,000 secondary schools.
Steps are being taken, but there’s still a long way to go in equipping youngsters with important financial skills.
