It was announced last week that personal finance education is to be included in the school curriculum In England from September 2014. Schools in Wales, Scotland and Northern Ireland already teach personal finance skills, which are becoming more important to grasp at a younger age due to rising debt and the relative ease that one can obtain credit. The lessons will be taught as part of two different subjects; maths will now include ‘financial maths’, which will deal with things such as problem solving, working out APR percentages of loans and understanding taxes. Citizenship education lessons will deal with budgeting, personal finance products and working out the best deals, as well as UK law and governance.
The changes have been made after lengthy campaigning by various groups, who believe that many financial problems could be avoided for individuals if they had a better knowledge about how things work. A lot of young people are going out into the world with little understanding of how to manage their finances. Many are being sold financial products, such as credit cards, by their banks and are taking the responsibility on without fully understanding the implications. A survey performed by YouGov showed that 96% of 18 and 19 year-olds who have a credit card had not checked to see if they were getting the best deal, and 98% had no idea what the APR was on their current card.
The problems develop further when naïve young people are marketed to for riskier products such as payday loans. Without the correct education, they may not understand how the interest rates work, meaning that they quickly fall into debt that they can’t control. The lessons that are being instated in schools will span the ages of 11 and 16, with some primary schools also teaching basic finances. Some schools are creating a school ‘bank’, which deals in a made-up currency. This currency can be used by pupils to gain extra playtime or small prizes. The ‘money’ is handed out for good behaviour, and it is thought that some secondary schools will allow pupils to save or even invest these rewards in order to teach them the basics of how savings work.
By giving young people this knowledge, it is hoped that there will be less people who have to deal with crippling debt in the future, and it is also hoped that it will prevent children from worrying about their family’s finances because they don’t understand them. By providing this base awareness of financial planning and management, those leaving school and going straight into work will be less vulnerable and will be a lot more confident in setting up a strong financial future for themselves.