Financial Education?

With summer holidays now upon us for most schools, children can attend to having a break before preparing for next year, in which there comes something new: Financial Education.

It has long been a belief of mine that in schools in the UK we do not teach our children enough about essential life skills such as budgeting and pensions, which is something that occurs in the lives of every individual at some point in their lives, instead focusing on trigonometry and other specialised mathematics which is not going to be used in everyone’s life. This means that children are heading into University or out into the big wide world without the necessary skills to live a successful independent life. Well this is all about to change

Financial education is a subject which now means that 11-16 year olds will be taught both budgeting and pensions, as well as looking at public spending and finance related problem solving. This change has been lobbied hard for by charities ever since the recession hit back in 2008 and it’s taken all this time for it to finally come.

In the Guardian this morning, the journalist had visited a school looking into this story and how the kids felt about this change, and the kids of the school responded with mixed feelings. Here are some examples of what was reported;

“It’s probably as important as English and business studies,” says Karim Blake.

Chaib is worried about too much focus on saving. “We are teenagers. We should be able to spend on what we want. You should start worrying when you are 16 … I don’t want to get: ‘You are going to have a rubbish future.'”

Gabby Urbonaviciute is also unsure. “If it was for the whole time, I think it would get boring. Today is fun. Two lessons but not more than that,” she says while filling in a quiz on which celebrity spender she is most like – from “super saver” J K Rowling to “spenderholic” Mike Tyson.

There are some points about this that I quite like. Take Karim’s point for example. He cites English and Business Studies, which is understandable if you want a working knowledge of how the economy works and how businesses in differing fields may make money. What surprises me is that budgeting and finances actually comes under Business Studies, albeit slightly differently to what the government are bringing in now, but the principles are the same. For me personally I don’t see why the government shouldn’t make Business Studies a compulsory GCSE subject and teach budgeting and pensions as part of that.

Gabby also raised quite an interesting point and it’s the same thing that came to my mind. Is 5 years really necessary? How many lessons a week would you need to cover everything? Being brutally honest I can’t see how you would be able to fill that many lessons with the topics that were listed under Financial Education. The issue with this is that it could end up falling into the category of ‘marginalised’ subjects which tend to fall by the wayside.

This workshop that piloted this new subject is being run by MyBnk. Set up in 2007 it has so far helped 80,000 children with lessons on the difference between “needs and wants”, how to save, public spending, banking and enterprise.

Founder Lily Lapenna started the charity after working in international development in Africa and Asia. When she returned to London it was the calm before the great financial storm but Lapenna was already nervous about the build-up of personal debt.

“Credit flowed quickly and easily – overdrafts, credit cards and mortgages. Many of my friends were in debt but living fabulously without a clue of what APR meant nor how it impacted them,” she says, referring to the annual percentage rate (APR) measure of how much it costs to borrow money. “Something didn’t feel right. Sure, we could pay our monthly bills, but what if we lost our job, what would we do if our boiler packed up?”

She started classes for schoolchildren and since the onset of the financial crisis, demand for MyBnk’s sessions has soared. “We need to teach students to manage money. That was not the prevailing attitude pre-crash where thoughts were, they will learn from their parents,” says Lapenna. “Demand has skyrocketed … Next year we are targeting a doubling of our reach to 40,000 young people.”

Since changes to the national curriculum were announced last November the charity has been providing classes that fit the new guidelines and anticipates even more demand from September. Under the changes, lessons in budgeting and public spending will be taught in citizenship and financial equations will be part of maths teaching.

There are doubts about whether the curriculum requirements go far enough and whether teachers will be well enough supported. But those who campaigned for financial education in schools have broadly welcomed the change.

Tope Chiedozie, an education officer for MyBnk, says such lessons are vital to help children understand basic concepts about earning, saving and spending before they leave home. He also wants them to gain skills they can put to use straight away. “Many schools have chicken and chip shops and newsagents nearby. When you look at their budgets and what they spend in a week it’s scary. Some of them are given £20 on Monday and on Tuesday have £2,” he says. “At schools in more affluent areas the challenge is teaching children about the value of money,” says Chiedozie. “Some kids I ask: Have you got a mobile phone, have you got a laptop, an iPad, a computer, a TV in your room?’ Some have all of them. Overindulgence like that doesn’t help the money in their hand have any value at all.”

Rhiannon Colvin, another trainer with MyBnk says financial education is as much about young people understanding the public finances as their own personal finances. “I hope that they are empowered with the knowledge to make their own decisions and to have more say in how the economy works,” she says.

One thing that stands out wherever she runs sessions, says Colvin, is an entrenched view about how the government spends its money. “They are saying things like (money goes) to benefit scroungers. When you ask them what the government spends its money on you’d think that the first thing they would say is schools or hospitals but they say people who are not working. Those media messages filter down.”

Freddie Ewer co-founder of the financial education group RedStart says new teaching in the area must work towards changing attitudes in the UK. “This has a huge role to play in ensuring we don’t end up with another huge debt driven financial crisis,” he says.

RedStart, spun out of a pensions adviser, is also seeing rising demand from schools for its sessions. It is recruiting companies in the financial sector to host and teach the workshops. “I think the financial crisis has brought a shift in financial responsibility away from government and big business to individuals, for example, in pensions, tuition fees, increasing use of private healthcare. If you are going to put all this responsibility on the shoulders of people you need to have an education system that explains to them at a young age how basic financial concepts work,” says Ewer.

There are worries that the national curriculum changes will leave many children behind. MyBnk points out there are still no compulsory financial lessons for anyone over 16, when they may be facing big financial decisions. Also, academies and free schools can opt out of teaching the national curriculum.

Teachers themselves will need training or outside help, say charities. “A lot of these people who are being asked to teach financial education have never been taught it themselves,” says RedStart’s Ewer.

The deputy head at the school, Alice Clay, is hopeful that given her school has included financial education in classes for some time, the new term will not bring a significant shift. But she expects some areas of the new curriculum to be more challenging than others. “The children are really interested in the enterprise part of things and business planning. We have to work harder to keep them interested in personal finance issues,” she says.

I guess this is another ‘time will tell if this will work’ theory, although I do suspect that the teachers will not necessarily have had adequate training to be able to take on teaching these subjects. My concern is who is going to be teaching this, how often is it going to be taught, and for how long will each lesson last. Part of me suspects that it may be one of those things you briefly look at in morning and afternoon registration and then it whizzes through one of the kids ears and out of the other. Of course I would hope for that not to be the case because these skills are essential and thus need to be given the time and care that it deserves.

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