The debt crisis continues to grow in the UK – but is our understanding of how to pay our bills growing with it? Bombarded with small print and contradictory figures at every turn, it can be hard to grasp complex financial concepts. Credit company warnings are calling into question whether we are getting the financial information needed to make the decisions that keep a roof over our head.
Debt charity StepChange revealed last year that the number of younger clients seeking debt advice has grown by 10 per cent in the last five years. The loss of private tenancy remains the single biggest driver of homelessness, according to government figures, with rental arrears a key reason as people struggle to find the cash to cover it.
— Young Money (@YoungMoneyEdu) September 3, 2018
But in theory, kids should leave school fully prepared for the wider world – financial education has been on the national curriculum in England and Wales since 2014. That allowed primary school kids to get their teeth into money studies in personal, social and health education (PSHE) and citizenship as well as using pound signs in their maths sums. Wider social context is added in high school with a focus on personal finance, taxes and credit in citizenship classes.
When you’re teaching children how to cross the road, you don’t take them to the blackboard, you take them to the road where the cars are whizzing past. I think that’s the same with money
In Scotland, the Curriculum for Excellence, introduced in 2010, has provision for covering financial understanding, competence, responsibility and enterprise across learning. But is the information delivered in classrooms enough to keep heads above water? Russell Winnard of leading financial education charity Young Enterprise says: “No, it’s not.
“I think the slightly unfortunate news is that putting financial education into the national curriculum has not made any substantial difference. The academisation of schools [almost a third of state schools have become academies] has had an impact – academies don’t have to follow the national curriculum. It’s also about what national curriculum we give to schools and winning the hearts and minds of teachers, because education is about preparing our young people for the next stage of life and the world of work.”
When it comes to exam time, financial education is unlikely to be one of the subjects kids are graded on. Citizenship is the only subject where financial education is actually tested, with public finance questions in exams for 11 to 16-year-olds. But the trouble is that it is not a compulsory subject, with exam regulator Ofqual finding that just 1.7 per cent of pupils chose to study it at GCSE.
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Sharan Jaswal is the director of education at MyBnk, a charity that provided workshops on financial education for 26,000 young people last year from the age of seven to vulnerable adults aged up to 25. And for Jaswal, financial education’s place on the national curriculum is not the be-all and end-all. In fact, it is just as important that teachers are taught too. An all-party parliamentary group on financial education in 2016 found that almost a fifth of teachers involved in teaching it are still not confident about the subject.
“It was great when financial education was included on the curriculum and it was something that we campaigned for over a long period – it felt like a bit of a victory at the time,” says Jaswal. “But how it is done is the issue. There’s a widespread understanding that schools and teachers are underfunded and overworked and expected to find time to teach this subject when they themselves might not have had that education in the first place.
— MyBnk (@MyBnk) September 4, 2018
If classroom contributions are not fitting the bill, there are financial education programmes elsewhere that can instil crucial positive financial habits. MyBnk’s Money House programme takes cues from Big Brother with a five-day crash course on living with others, paying bills and making positive lifestyle choices – albeit without the pressure of round-the-clock filming. Taking place at two flats in Greenwich and Newham, the programme has been such a hit that it is now mandatory for care leavers in some London boroughs. And that’s because attendees are three times less likely to fall into rent arrears than their peers, while none of those who complete the course have been evicted, according to a 600-strong survey. It also highlights the importance of context, as well as time, in giving kids the tools to have a positive relationship with their finances.
That is often a tricky thing to provide in the classroom, which is why apps like RoosterMoney are aiming to tap into kids’ tech savvy to track their income. The app allows parents and children to have a visual account of pocket money. This enables kids as young as four to see a real-time balance of how much they have earned, making them responsible for deciding whether to make that impulse purchase in the supermarket aisle.
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Will Carmichael, RoosterMoney CEO, insists that it is a key part of building a positive conversation about money and reinforcing good habits from a young age. “I think the important thing about teaching children about their finances is that it is contextual,” he says. “When you’re teaching children how to cross the road, you don’t take them to the blackboard, you take them to the road where the cars are whizzing past. I think that’s the same with money.”
The challenge of equipping the youngsters of today with the financial tools to stop them becoming the homeless people of tomorrow, or worse, is clear.
“When you come out of school and you all of a sudden have access to a range of products on offer, it can be really confusing and hard to find out what is best to do,” says Winnard. “The news you see of people who can’t cope in that situation can be truly devastating. It’s an important area for young people because the mistakes that they can fall into can have serious consequences.”