Money has long been avoided as a topic of polite discussion; it is typically consigned to the ‘conversational danger zone’, along with politics and religion. While, admittedly, the fact that you bought your mother’s birthday gift at half price because you overspent on your holiday in Marbella should probably stay between you and your debit card, the absence of finance from general discussion is proving extremely damaging to the economic success of the younger generations.
A generation in debt
As the western world emerges from financial crisis, the necessity of a comprehensive economic education for young people could not be clearer. Teaching young people how to budget, save and understand the significance of money could not only help them to avoid debt in the short term but could also improve the way in which they manage their finances later in life.
In the UK, the level of personal debt is higher than that of national debt, cashing in at £1.43 trillion, or £9,000 per person. Declan Wilkes from MyBnk, a financial education charity that runs programmes and workshops to educate young people on topics such as saving, budgeting and social enterprise, says that this is unsurprising, given that money management lessons are simply not available to young people.
Following the recent increase in tuition fees, students have little option but to borrow thousands of pounds to fund their university educations. Despite this, they are rarely taught how to make informed decisions regarding budget management or spending wisely and are, consequently, likely either to overspend or run out of money altogether. Falling prey to impossible credit card bills and payday loans is identified by many young people as their biggest fear relating to adult life.
Louise Baxter from Make Money Make Sense, a website which provides financial literacy resources to consumers, educators and teachers, suggests that many individuals are at risk of financial exclusion.
“Bits of financial education exist in UK school curricula already, but it needs to be altogether more thorough,” Baxter says. “With a higher standard of financial education, there would be fewer vulnerable individuals in situations of financial exclusion, at risk of being targeted by scams.”
While the deficit in financial understanding is the most marked among young people, more mature adults and senior citizens could also benefit from improving their grasp of payday loans, credit cards, credit ratings and inflation. According to Baxter, teaching young people about money could serve a dual purpose by also improving older generations’ financial understanding,” she says, referring particularly to senior citizens’ increased vulnerability in the face of financial scams.
Financial education initiatives
From September 2014, England will join Northern Ireland, Wales and Scotland in including financial education in the school curriculum. The direct beneficiaries of this decision are pupils between the ages of 11 and 16 who study at government-funded institutions, which represent approximately 50% of England’s schools; these students will be able to study Finance as a module within their Citizenship and Mathematics course.
While this initiative to make financial education available to students is, undoubtedly, a step in the right direction, its implementation is proving more complicated than hoped. Wilkes says the lack of funding for teacher training in this area and restricted class time available will mean financial education will be limited to start with.
MyBnk is among a number of organisations currently dedicated to overcoming these difficulties. Since 2007, the charity has helped more than 80,000 children by raising their awareness of basic financial issues; issues on which schools, as a report by the Centre for Social Justice notes, are too poorly-equipped to advise. “Teachers are asked to cover a lot... Requiring all (teachers) to train to become experts is not optimal,” Wilkes says. “Schools can and should use internal and external strategies and allow our specialists to support them to maximise effectiveness.”
The devastating effects of the recent financial crisis upon the west have caused developing nations to be wary of repeating the same mistakes. This, according to Wilkes, has prompted MyBnk to export its training programmes to Asian and African banks and charities, thus adding an international dimension to their services.
China’s ‘Be Better Education’ has begun to import and use MyBnk’s workshop material to provide local teenagers with a ‘clear picture of how money operates as part of their daily lives’. Operating across the country, ‘Be Better’ educates groups such as disadvantaged families and migrant children by offering professional training, opening community centres and forming partnerships with schools. Chief Executive Alan Wang states that, “according to a nationwide survey on financial education, 86% of teenagers want to learn how to manage their money and 87% of schools don’t have any lessons or knowledge on financial literacy.”
Slowly but surely, an increasing number of countries are realising the importance of providing basic financial education for young people. While the question of whether or not this realisation will mean the avoidance of a future financial crisis remains to be seen, there is little question that young people will benefit from preparation for the challenges of adult life within a global economy.