/ Money, Parenting

Make financial education compulsory in schools

Child counting money

Last week Martin Lewis launched an e-petition to make financial education compulsory on the school curriculum. I’m pleased Which? is supporting him – my own financial knowledge, even now, leaves a lot to be desired.

When I was at school we had a bank. It was run by students, with the help of one of the larger banks, and you could open real accounts and deposit real money. There weren’t any safes or tills – the whole thing was run out of the food technology classroom.

It was a great idea at the time, but problems with our financial understanding won’t be fixed by tiny initiatives like this.

By the time I left college I understood just enough to get a good student bank account. I knew it offered an interest-free overdraft (probably good) and that I could get a credit card if I wanted (probably bad). But my understanding of debt in general was woefully poor.

Carrying the burden

At university I was extremely lucky – I never had problems getting summer work or part-time jobs, so I didn’t end up with too much debt. But I have friends who racked up thousands of pounds on cards that some are still struggling to pay off.

And now, as a real grown-up, I have mortgage debt as well as credit cards and I’ve been mis-sold a completely inappropriate loan (thankfully now paid off). The problem is that often the only detailed information you get on these products comes straight from the salesperson’s mouth – how are we, as individuals, going to get the grounding we need to ensure that we can call them out when they sell us rubbish deals?

Make it compulsory

That’s why I’m delighted that Which? is supporting Martin Lewis’ e-petition to get financial education made a compulsory part of the school curriculum. With proper education about finance, we could make sure that the next generation of adults not only avoids pointless debt but understands how to hold companies to account for shoddy deals, mis-selling and crippling interest rates.

Here’s what Martin said:

‘It’s a national disgrace that for 20 years we’ve educated our youth into debt when they go to university but never about debt. It’s no surprise we’re a massively indebted nation, with much of the population financially illiterate, and victims of almost constant mis-selling.

‘The easy and cheap solution of this is to ensure every child gets some basic personal and consumer finance education. Some schools already do it, most don’t. Head teachers can’t prioritise it because it isn’t a compulsory part of the curriculum. This needs to change – we’re not talking huge hours adding to teachers’ workload, just ensuring it happens.

‘This is one of the few areas banks, companies and consumer groups agree – as do 97% of the population – the problem is, the government won’t do anything about it. By using the new e-petitions system we hope to force them by getting 100,000 signatures. I’m frankly overjoyed to have the weight and authority of Which? backing this too – it means a huge amount.’

So, what do you think? Would you like to see all children and young people getting educated about finance at school? Sign the e-petition if you want to show your support, and let us know what you think below.

Comments
Member

Sounds like a good idea and great that Which? is supporting it.

When I was at school I was taught Greek mythology and I remember thinking that this might not be useful in later life. If I had learned anything, it might have helped me to answer questions on University Challenge, but not much more.

Most of us need up-to-date financial education, and making a start in schools is long overdue.

Member

I disagree on this issue.
The reason personal debts are at record levels is a combination of factors of course. Martin Lewis states “97% of the population agrees” – this is as per his usual standard of journalistic rubbish. he’s found another way to aid his own company’s self promotion, that itself is hidden from public view and scrutiny.

Personal debt is down to government’s policies and a complete lack of regulation.
As much as I loathe banks for their charges and blatent profiteering at the expense of customers, using at best, questionable methods, I cannot blame the banks as they are operating under a set of rules and a regulator that openly encourage them to do so, by not enforcing laws already in place with legal precedent to call upon. Banks are a business and will push all legislation to its limits to obtain profits.

Most people I speak to, are financially literate. They know they have to pay it back. Many younger people simply don’t care about debt, as long as it doesn’t affect their lifestyles, they will continue to borrow, they are enjoying life.
When I left school, (Early 80s) overdrafts were like gold dust, mortgages were hard to come by with strict criteria on lending, I didn’t know anyone with a credit card.
Now millions have them, the banks increased balances on them because regulation allowed them to, regulators didn’t stop them so they carried on.

There are many millions of people who do not use them, do not overstretch themselves, who are financially literate.
If the UK wants to move away from personal debt, then regulators should start doing their job!
In all areas of personal finance, pensions, mortgages, credit cards, etc, those regulators – who receive millions of taxpayer’s money each year – need to step up and pull their fingers out.

There are those that say if regulators get strict and enforce rules/laws, it could cost jobs, see businesses close, etc, well tough!
It would only take a couple of legal cases and the majority of the industry would stop doing it.
It is no coincidence that in the UK we have record levels of personal debt at the same time as it is easy to get credit/loans/overdrafts, when mis-selling has been found, it is down to the individual and takes an age to have the money paid back/laws enforced.

By all means teach in schools about the value of saving and encourage children to do so, but how would it be regulated?
What criteria would be used?
How do we stop banks (read businesses) exploiting their position?
How would we know that the correct advice is being given?
How much would all this cost taxpayers?

I cannot see a bank going into a school and teaching our children about bank accounts and how they work, when that same bank is manipulating accounts to increase the amount of charges they can make on it (with unenforceable charges under common law).
How will children/parents react when a bank goes into schools to teach children on the virtues of financial management, when that same bank has just forced through a charging order on to the parent’s home and called for the sale of their home to pay a credit card debt which that very same bank has on its books?

The elected government and the people rule this country, it’s time the regulators started acting in a way that reflects this before they are scrapped altogether!

Member

Hi frugal ways – I think you raise a lot of really important points, particularly on the nature of regulation. You’re right that we can’t expect better financial education to solve all of the issues, and it’s extremely important that we also work towards making sure that all banks treat their customers fairly.

I don’t agree that most are financially literate. Yes, most people have a rough idea of what a credit card is (likewise loans, mortgages, etc) but there does seem to be a real gap in people’s education about the issues surrounding all of these things. I think a proper financial education curriculum wouldn’t just be about teaching the students about specific products, but rather making sure that they understood concepts of debt, credit, contracts, fixed term deals, etc.

In terms of banks coming into schools – I think maybe this was down to confusion about my convo (sorry if it wasn’t clear) – the bank example was just a story about my own financial education – I was trying to think back to what I was taught about finance in school, and I think that it was limited mainly to some intro sessions we were given when the bank came in. However, a proper financial education curriculum wouldn’t be an excuse to get banks in schools talking about their products – I imagine it would be much like other curricula – taught by the teachers themselves.

So I think some of your questions e.g. ‘how would it be regulated?’ ‘what criteria would be used?’ etc would be answered when the curriculum was being developed – much as these checks are done for maths, science, geography, etc courses that are run at the moment.

So yes, I think there are obviously details that would be addressed in the development, but on the whole I think it’s a fantastic idea – the more we learn about money-management and finance when we’re younger, the less likely we are to make financial mistakes. However I completely agree with you that this has to go hand-in-hand with sensible regulation of the banking industry, as well as proper checks and balances (e.g. ombudsman with robust powers) to deal with banks that misbehave.

Member

There is definately a role for parents here. Even then, the limits of what can be done is limited as its the individual’s choice to borrow/spend etc.

Financially literate – I cannot see how the concepts around products can be taught.
As an example, look at payment protection insurance.
The regulation and enforcement of it, are a complete shambles.
People who have PPI have recently found that it must have been sold as a stand alone product and not included in the loan (for example) years this has been sold this way, regulation/laws not enforced.
So people can seek redress via the FOS and/or the small claims court – different rules and outcomes apply to each course of action.
A cancellation fee is said not to be present on sign up to the PPI policy, if one exists, in a small claims this is deemed to be proof of mis-selling, but to the FOS, it can be overlooked if the ombudsman deems it to be “not a significant amount”

Until we get the basics of regulation consistent and enforced, so that everyone knows what’s going on, then I cannot see how it can be taught in schools.
Imagine the mess if a 16 year old is taught how PPI works in school and 8 months later takes out a policy which he later discovers, he was given the incorrect information at school. Could he bring a legal case against the school/authority?
Ironic, we are bailing banks out and covering their backs by securing their losses and overstretching, now we taxpayers are expected to fund yet more teacher training through our taxes, which will no doubt be done at some stage by banks “getting involved” – not to mention yet more workload adding to a curriculum thats already over loaded.

I wouldn’t welcome any contribution from any bank as regards teaching my child. I myself do not have a bank account.
My children’s financial competance is down to my wife and I as parents, even then we can only advise and warn of pitfalls and charges etc, they may come up against.
At the end of, it is down to them.

Member
Scott Sullivan says:
15 August 2011

I have just been speaking to my Wife who is a Teacher in a Secondary School.

She has told me that personal finance is currently taught as part of the Citizenship module of PSHRE (Personal Social Health and Religious Education). This is called different things in different schools but many schools offer something similar.

She acknowledged that personal finance may not get taught in the depth we would like but there is certainly room to expand this without affecting the rest of the curriculum. She has also suggested that basic economics could be covered as modules in other subjects such as Maths and Geography.

There is, therefore, no excuse for not better educating our kids about this.

Member
Pennysmart CIC says:
15 August 2011

I fully support any campaign to teach more financial education in schools, yes we may be a bit biased, we are a non-profit social enterprise working in the community, and there are plenty of organisations like ours only too willing to either go into schools to teach FE (from an impartial stand point), or to train teachers to deliver money education. We find the pupils are very eager to learn about budgeting, shopping around for the best bank accounts, making wise lending decisions (reading the small print), setting money aside for the future and where to go for the best free and impartial advice if you do get into difficulties with money. Most 16-18 yr olds know all about wonga.com – but little about citizens advice services! Our biggest struggle is to manage to get a slot on what is a packed PHSE curriculum for students, often schools are keen but there is simply not enough time to allocate to money education, sometimes we are lucky if we can secure a 30 min slot with some schools.

Member
Phil says:
15 August 2011

No good trying to teach children how to handle their finances until they’ve mastered basic numeracy. Over a third don’t.