Financial literacy is low on the educational agenda. Many pupils are not being taught even the basics of saving, investing, budgeting or managing debt.
Investing and saving money from a young age can make a huge difference to a person’s future financial wellbeing. When you’re young, you have plenty of time for your money to gain interest, particularly if money is invested in low-risk index funds.
Learning young allows you to make mistakes without having financial commitments such as a mortgage or dependents. The problem is most people are never taught this, along with other crucial information around personal finance.
Not on the school curriculum
A survey for The Mail on Sunday revealed that nine out of ten students believe they are not taught enough about personal finance in school.
Similarly, a study by a polling organisation, Britain Thinks, found that a large majority of millennials feel ill-equipped to manage their money, further suggesting that lack of knowledge is holding them back from making positive progress with their finances.
“Personally, I find it astonishing that learning algebra is obligatory, but budgeting or mortgages seem to be considered unimportant.”
In my own experience, I was taught virtually nothing at school about money. Maybe this is because teachers themselves don’t feel confident about teaching the subject, in addition to the fact it is not a requirement on the school curriculum.
Personally, I find it astonishing that learning algebra is obligatory, but budgeting or mortgages seem to be considered unimportant.
The need for financial education
Money is a huge part of our everyday life. Whether directly or inadvertently, it impacts many decisions we make and can cause feelings of either security or stress. A study in the Community Mental Health Journal shows that money and debt problems are linked to high rates of depression. Although money itself will not bring happiness, a lack of money and financial knowledge can have painful consequences.
“If I knew about budgeting, low-risk investing, and building a good credit rating when I was younger, I feel I would have been more equipped when leaving home for the first time.”
Statistics show that over half the UK population are in debt. Many people struggle from pay check to pay check and, if this pandemic has taught us anything, it’s that we don’t know what’s around the corner. It’s best to have some savings to fall back on.
If I knew about budgeting, low-risk investing, and building a good credit rating when I was younger, I feel I would have been more equipped when leaving home for the first time. It sounds simple now, but when you’re younger, few people are thinking about their future pension or down payment on a house.
Building confidence around personal finance
We leave school and are expected to know how to navigate the confusing world of personal finance. Transitioning from college to university is a big change in many ways. Newfound independence and leaving home are all significant changes.
“Without any formal education from schools, or parents, it can be difficult to make good financial decisions at university, and beyond it.”
But there are also financial changes. As a university student, you pay rent (for the first time for a lot of people), open up student bank accounts, buy your own groceries, and pay bills. Without any formal education from schools or parents, it can be difficult to make good financial decisions at university, and beyond.
If you decide to do your own financial research later in life, there is a lot of confusing jargon on the internet that is likely to puzzle or deter you. If we all learnt financial literacy from a young age, those leaving school would have at least some knowledge of how to manage their money and could step into the world of adulthood with more confidence.
Financial literacy in the next generation
We live in a world where financial intelligence is increasingly important. Capitalism is at the core of our society with over £22 billion per year spent on advertising in the UK.
Social media perpetuates the need to be ‘on trend’. Instagram influencers make thousands from posting a photo encouraging you to buy the latest product, and advertising is in everything thing we listen to or watch. It’s unsurprising that many people end up in debt.
Though it is unlikely to miraculously change the future financial lives of all students, starting the conversation is important. This way we might be able to create a more financially free society for future generations.
Rosie Jempson
Featured image courtesy of Annie Spratt via Unsplash. Image license found here. No changes were made to this image.