Sara Benwell 6.00am
It is vital that we have financial education in British schools. In fact, I find it incomprehensible that it hasn’t happened already.
We are in the middle of a financial crisis and average household debt is still growing. According to the latest Aviva Family Finances Report, the average family’s debt (£10,604) is equal to just under half the average family annual income (£23,796) and yet people are still leaving school with no basic financial education.
One argument against it is that children are still getting some financial grounding from the core maths teaching.
Yet that doesn’t quite ring true. I left school with an A-level in Maths, but I had been given no grounding in a vast number of basic concepts of personal finance. The syllabus did cover compound interest but that’s hardly all there is to it. Even if the Maths syllabus was tightened up to include more financial application it wouldn’t solve the problem.
People need to learn about debt, pensions and credit cards. Surely every school leaver should have a basic grounding in personal finance before they go out, get a job and save for a pension?
One question is whether the current teachers possess the right skills to teach Personal Finance.
The answer is: ‘probably not’. But I’m not necessarily arguing for it to be taught by existing teachers like sex education or PSHE. I’m arguing that it should be a mandatory GSCE. Look at your core subjects: Maths, Sciences, English. All good and necessary, but are we really trying to say that having a good knowledge of personal finance isn’t just as necessary?
Look at it this way. I am not questioning that every child should have a good grounding in Science - they should - but I can’t remember the last time my Science GSCEs came in handy. An education in personal finance, however, would have improved my life every single day.
The crux of the matter is consumer protection. The personal finance pages do a brilliant job of beating that drum but there will always be people out there looking to take advantage of uneducated consumers.
Look at PPI miss-selling, look at pay-day loans, look at the recent Which? study showing that only five out of thirty-seven advisers in banks and building societies give good advice about investments.
As long as there is no basic level of protection, people will continue to be taken advantage of.
A sound financial grounding will set the general public in good stead for later life. Most people - regardless of whether they go to university or not - will be getting a job, buying a house or renting, running a car. How can we expect to solve the country’s financial problems - personal debt, slow growth, inflation - if we don’t have an education system which supports teaching people about what those mean? How do we expect consumers to balance their increasingly stretched budgets without first arming them with the tools to do so?
One person leading the call for financial education is MoneySavingExpert’s Martin Lewis, who is working with the All Party Parliamentary Group for Financial Education to lobby to get financial education in schools as compulsory.
Mr Lewis has led 30,872 people to sign a petition (which is now closed) calling on the Government to implement personal finance education, and has long been making the case for why this is a crucial and necessary measure.
The message is simple. The country has a debt problem and it is getting worse. Most people don’t understand basic financial terms, and don’t have the right tools to be savvy consumers, and to understand the products they’re being sold. There are companies who will always be willing to take advantage of those who’ve not had a rounded financial education, and as such, all we can really do is to teach people the basics, make sure they know their SIPPs from their ISAs, make sure they understand the value of having a pension, and how much they need to save to be comfortable in later life, make sure they understand the various deals they’re being bombarded with by supermarkets and that they know how to work out which is the best, and most crucially to make sure that they understand not to live on plastic, and how not to get into unsustainable debt.
Essentially what we need to do is to implement compulsory financial education in schools, as soon as possible, and make sure that the people of the UK will be financially smarter as a result.