It has been 10 years since financial education was introduced to the national curriculum for secondary schools in England.
At primary school level, the national curriculum provides a framework for young children to recognise coins and learn how to use money through simple ‘number problems’ in maths lessons.
The ‘real life’ context comes later, during citizenship or ‘personal, social, health and economic’ education from age 11.
However, some schools do not follow the national curriculum, adding weight to the criticism that financial education is inconsistent in England.
Children need to be taught that Amazon doesn’t just turn up on the doorstep with toys
Earlier this year, a report by the House of Commons Education Committee found widespread evidence that financial education in England’s primary schools was “insufficient and should be expanded”.
So, how should financial education be presented to younger children and what role do financial advisers have in this?
Never too early
While not perfect, financial education has a bigger presence in other parts of the UK.
In Scotland, for example, it is part of the maths curriculum from age three and is taught within social studies as part of learning about business and enterprise.
In Northern Ireland, where financial education is a statutory requirement from age four, the value of money, saving and budgeting are covered in the later primary school years.
This can be achieved by better collaboration between policymakers, financial services providers and charities
Commentators point to research from Cambridge University in 2013 — which showed that financial habits tend to be formed by the age of seven — to underline the importance of financial education at an early age.
Some recall personal experiences with their own children that highlighted the need for early financial education, particularly in an increasingly digital and cashless society where spending has become so easy and scammers are at large.
About four years ago, MKC Wealth chief executive Dominic Rose was astounded when one of his children inadvertently ordered a toy from Amazon while playing with an iPad.
“My three-year-old had no concept of money being spent and no understanding that money had to be earned,” he says.
“Children need to be taught that Amazon doesn’t just turn up on the doorstep bringing toys.”
One of the ways MKC Wealth is helping with that is through a series of children’s picture books featuring the character of Eddie Teddie. The books aim to provide young children with ‘gentle’ financial education as they follow Eddie Teddie’s tale of earning extra pocket money to save up for a scooter.
We are teaching young children about coins, but less than 20% of transactions are in cash
Eddie Teddie was created by Face-to-Face Finance in 2019 and MKC Wealth ‘adopted’ him when it acquired Face-to-Face Finance last year. There are currently three books in the series, with a fourth in the pipeline.
“We picked up the mantle and gave the Eddie Teddie books to our clients to give to their children,” says Rose. “We are also selling copies through Amazon, with all proceeds going to a financial education charity.”
Primary schools — and even nurseries — are ideally placed to support parents in providing financial education at home by suggesting fun activities and signposting to useful information online.
“There are so many ways [to approach financial education] as all children learn differently,” says Rowan Harding, a financial adviser at Path Financial.
“Sometimes it can be very practical, to give children a feel for money rather than using electronic money.”
Teachers tell me the curriculum is so full they don’t have the room for financial education. They would need to take something else off
Giving children pocket money on the condition they spend half and save half, taking them into a bank or building society so they experience paying money into an account, playing ‘shops’ or even setting up a pretend bank are just a few of Harding’s suggestions for very young children.
“There are lots of ways to make financial education enjoyable,” she says.
A structured approach
A recent report by financial services trade association UK Finance highlights a range of projects in which financial services firms are involved to improve access to financial education.
In 2023, UK Finance members provided financial education to 4.1 million children. However, the trade body acknowledges that “a significant amount of work” remains and it would like to see the creation of a structured financial education curriculum roadmap.
In the short term, we believe the best way to deliver financial education in schools is to have approved external delivery organisations
“This should begin in early childhood and extend through the teenage years, to provide a steady and evolving understanding of financial matters as children progress through their educational journey,” says UK Finance head of vulnerability, financial inclusion and capability Fiona Turner.
“The financial services industry has been proactive in voluntarily providing financial education resources for primary, secondary and special educational needs schools, and has received overwhelmingly positive feedback on the impact this has had on students’ understanding and confidence in managing money.”
However, the organisation estimates it has reached only 40% of school children.
“This is why we are calling on the government to fully integrate financial education into the national curriculum by making delivery of financial education lessons mandatory for all schools and monitored by Ofsted,” adds Turner.
Some believe it is important for financial education to include the behavioural aspects of making sound financial decisions.
This should begin in early childhood and extend through the teenage years, to provide a steady and evolving understanding of financial matters
“This goes beyond traditional subjects like maths; it’s about understanding the psychology of spending, saving and investing,” says Quilter chief executive Steven Levin.
“We urge the Labour government to recognise the critical role of financial education and integrate it into our educational system, including at earlier primary school ages when behaviour is often embedded in children.”
Levin believes that this will ensure financial literacy “becomes a common standard, not a privilege”.
Long-term impact
Those who work in financial services are passionate about financial education because they understand the difference it can make. MKC Wealth advisers, for example, volunteer at a debt-advice centre and regularly see the consequences of poor financial literacy.
It goes beyond traditional subjects like maths; it’s about understanding the psychology of spending, saving and investing
Research commissioned by GoHenry — the pre-paid debit card and financial education app aimed at children and teenagers — found that UK adults who had not received financial education as children were more likely to be unemployed or earning less compared to those who had.
GoHenry founder and chief executive Louise Hill says: “In the short term, we believe the best way to deliver financial education in schools is to have approved external delivery organisations, with specialist teachers and bespoke resources going in to teach financial education for a set number of hours or days each term.”
In the long term, adds Hill, teachers must be given adequate time and resources so they can teach the subject themselves. They do not have these now.
There are so many ways [to approach financial education] as all children learn differently
Five Wealth director Steve Hughes says: “Teachers tell me the curriculum is so full they don’t have the room for financial education. They would need to take something else off.”
This would, of course, require government approval.
As a Personal Finance Society education champion, Hughes provides financial education sessions in schools and runs his own sessions on financial services careers. He describes financial education provision in England’s schools as “an embarrassment”.
“We are teaching young children about coins, but less than 20% of transactions are in cash,” he says.
“It’s anachronistic and needs updating to be reflective of how young people see money today.”
Some people may question the effectiveness of financial education given that little research has been conducted on the impact and benefits.
We gave the Eddie Teddie books to our clients to give to their children
“But the reality is that it’s not going to have a negative impact,” says St James’s Place director of partner engagement and consultancy Alexandra Loydon.
She adds: “The proof is in the pudding, when lots of people are planning for their retirement — but that will take a generation to follow through.”
In the meantime, how does Loydon think this can be achieved?
“By better collaboration between policymakers, financial services providers and charities,” she says.
“We need everyone working together for the common good.”
This article featured in the October 2024 edition of Money Marketing.
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