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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 tends wounds that are left from the latest financial crisis, the necessity of a comprehensive economic education for young people could not be more obvious.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 they manage their finances throughout their entire life.

In the UK, the level of personal debt stands almost as high as the country’s national debt, cashing in at £1.447 trillion at the end of August 2015. This is up from last August’s figure of £1.414 trillion, and works out as an extra £635 of debt per UK adult just this year alone. The country’s national debt stands at over £1.602 trillion, a statistic that grows by a staggering £5,170 per second. According to the Office for Budget Responsibility‘s forecast from July 2015, the UK’s household debt is predicted to reach £2.551 trillion by 2021. If something is not done soon, the UK will spiral into the depths of the red and may not be able to claw its way out.

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 lesons are not available to young people.

Following the government’s increase of tuition fees back in 2012, UK students have little option but to borrow thousands of pounds to fund their university education. Despite this, they are not taught how to make informed decisions regarding budget management or how to spend their money wisely and are, consequently, likely either to overspend or run out 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

In September 2014, England joined Northern Ireland, Wales and Scotland by incorporating financial education into the school curriculum. The direct beneficiaries of this decision are pupils between the ages of 11 and 16 who study at government-funded institutions, representing 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 that are 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.”

International focus

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’ is utilising 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.

Image via Smart7 / Shutterstock.com

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