The consultation report’s findings support a survey of adults by uSwitch in September 2010 which found that lack of financial education had cost the British people nearly £250 million. 81% of adults surveyed said they picked up financial education by trial and error and 71% said lack of personal financial education was to blame for debt.
An All Party Parliamentary Group (APPG) on Financial Education for Young People launched on Monday 31st January. Formed on the back of a debt-ridden financial crisis and rise in tuition fees, pfeg has revealed that it’s set to be ‘the new power pushing financial education up the agenda, and coordinating the scores of agencies already working towards it.’
Ahead of the Group’s first meeting, Justin Tomlinson MP and chair of the APPG said: “I am passionate that financial education is the best way to equip all young people with the relevant skills to make informed decisions and empower them as consumers. I have been working hard to secure cross-party support to help champion this cause so the next generation is equipped to confidently address the financial challenges ahead.”
Making clear the failings of the past, together with the need for change, Martin Lewis, creator of MoneySavingExpert.com added: “It’s a national disgrace that in the 20 years since student loans launched we’ve educated our youth into debt, but never about debt. Now as tuition fees are getting bigger and some will pay commercial rates of interest for them, we simply can’t let students take this debt out unless we know how it works.
“Although some excellent work has been done in schools, the delivery of personal finance education on a national level is patchy. It needs to be a priority for every school to provide it for all its pupils. If we want the next generation to be financially capable we need financial education at every stage of their school life.”
Joined up action
More than 90,000 students at Further Education Colleges are being given the opportunity to build their financial knowledge, skills and confidence as part of the Barclays Money Skills programme.
Barclays and the National Skills Academy for Financial Services are working in partnership to deliver ‘learning weeks’ at 150 colleges and are seeking to strengthen student’s money management skills through an innovative programme of activities and events.
Recent research commissioned by the bank has highlighted that young adults face significant challenges when managing their money, at a time when they are likely to be entering financial independence and needing to stretch their incomes to meet their day to day needs. More than a third (36%) runs out of money regularly, with a further 27 per cent of unemployed young people saying they are always running out of money. Only a small percentage – 4 per cent – of all 16 to 18 year olds said that their school or college had given them advice or information in the last year.
Sylvia Perrins, CEO at the Skills Academy said: “Rising costs, lack of funds and the continued instability in the job market serve as a poignant reminder that the financial decisions students make are of utmost importance. Many young people are taking care of their finances for the first time – we hope that through our fun activities and learning sessions, students will gain a better understanding of how to budget, save and manage debts and bills.”
Deanna Oppenhiemer, chief executive, Barclays UK Retail Banking added: “With the help of our partners, we plan to reach one million young people with financial education through Barclays Money Skills by 2012. Having good money management skills, particularly when faced with a constrained budget, is vital to enhancing their life opportunities and preparing them for independent living. If we, along with our partners, can reach these vulnerable young people and help them build good money management skills then we make their lives much easier and lay the foundation for a better, sustainable future for the UK.”
Awarding good practice
The Royal Bank of Scotland Group (RBS) in association with pfeg (Personal Finance Education Group) is again looking for examples of excellence in personal finance education (PFE).
The RBS Personal Finance Education Awards look to discover and recognise the best efforts made by schools, teachers and students in PFE. It represents an ongoing commitment to building awareness of the importance of personal finance and economic wellbeing and sharing best practice across the educational community. All primary, secondary and special schools and colleges in England, Wales and Scotland can enter. Prizes will be awarded across a range of categories.
Building financial knowledge and entrepreneurial skill
MyBnk was founded in 2007 by a group of young people responding to a need to equip today’s youth with financial and enterprise education. The spark for the idea came from CEO Lily Lapenna, who saw the positive impact of micro-finance schemes on the lives of ultra-poor women in Bangladesh whilst she was working for BRAC.
Today it runs six interactive and practical education programmes, along with its pioneering FSA-friendly, youth-led banking and micro-finance scheme, “MyBnk-in-a-Box”. Nearly 30,000 young people, aged 9-24, have benefited from its work in 170 schools, academies, youth groups and children’s services through 32 London and South East local authorities.
MyBnk’s press & communications officer Sarah Waller explained that if made relevant, young people’s understanding of personal finance can improve dramatically: “All too often, we hear children say “I hate maths” and perhaps one reason for this is that they cannot see the direct relevance of it to their lives. Nevertheless, a large part of the curriculum at GCSE level is functional maths, which is an area where MyBnk’s financial education workshops can bring real added value. They complement the curriculum, by providing a down-to-earth, youth-focused introduction to money matters, at a level that actually means something to them.”
Sarah explains that good financial management can be taught in a number of ways: “The principles of good personal money management not only relate to maths and business studies, as highlighted above, but also map into the core curriculum for PSHEE (physical, social, health and economic education), citizenship and work-related learning. In addition, through running our banks or participating in our workshops, young people are developing essential life skills such as teamwork, prioritizing needs over wants, problem-solving and effectively communicating an idea.”
It’s been a tough few years - the credit crunch, the recession, spending cuts to reduce the financial deficit - recovery is on the horizon, but we are not there yet. So are attitudes to finance changing for the better? Sarah is confident that young people have understood the impact of the crisis: “They are often put off by the word “finance”, either thinking that it is boring and not relevant to their lives, or believing it to be over-complicated and impossible to manage. Yet they are becoming increasingly commercialised and targeted by companies and financial institutions as they become an ever more powerful group of consumers. Having witnessed the effects of the credit crunch and the recession within their own households, young people are aware of the central role of money and become active in the debate surrounding the axing of the Educational Maintenance Allowance and changes to tuition fees.”
So is the current provision of financial advice and education sufficient and how important is the teaching of financial management in schools to individuals, society, economic recovery and future prosperity? “There is a general consensus among teachers, parents and politicians that financial education is vital in the development of an educated workforce. One of the largest ever All Party Parliamentary Groups has just been established to tackle this issue. Currently, the market is simply not satisfying this demand. Compounded by recent economic events, demand for our programmes has doubled in the last 12 months.”
Martin Lewis is pleased to see cross party support on the issue moving forward: “What’s deeply frustrating campaigning on this over the years is while virtually everybody agrees it’s needed and people often say ‘I wish I’d had it’, making it happen is a nightmare. That’s why this coordinated effort is so exciting. After all, as a financially illiterate nation, it’s not enough to rely on parents. Schools are the key to breaking the debt cycle and could save the public coffers a fortune.”
