Financial education for children: new challenges for UK schools

Jessie Sim

Research Fellow, CHASM

512px-Piggy_bank2

Financial problems are usually caused by low income rather than poor money management but given our increasingly financialised world, the importance of providing financial education for children from primary to secondary schools in the UK has been emphasised and lobbied for by many (e.g. All Party Parliament Group on Financial Education for Young People, 2011). One of the main reasons is to improve children’s financial capability so that they are better prepared for financial decisions as they enter adulthood. Financial education can provide them with the necessary knowledge and skills needed to make informed financial decisions. It can also shape attitudes. For instance, children are taught budgeting and saving methods, which in the long run, can increase their propensity to save and be more cautious about spending money. Also, children come from various family backgrounds and have different experiences with money, so schools become a common platform for children to learn and discuss about financial issues which they might not be aware of.

In the UK, the most notable and recent victory for financial education in 2013 was that the DFE (Department of Education) mandated the provision of financial education in the National Curriculum.  Surveys of schools in 2001 and 2005 showed that when financial education was not a compulsory subject, the provision varied greatly between schools and majority allocated only one to two lessons per month for it (FSA, 2002; FSA, 2006). Another survey by the FSA found that about two-thirds of adults felt that they had learnt nothing about personal finance in school while only one-tenth felt they had learnt a lot (FSA, 2004). It is therefore hoped that by making financial education mandatory, these problems can be overcome.

It is likely that most children will be looking forward to receiving compulsory financial education. According to statistics by PFEG (Personal Finance Education Group), 54% of teenagers are interested to learn about saving and 51% would like to learn how to control their spending (PFEG, 2013a). A recent research revealed that 88 percent of adults in the UK would like financial education to be taught in schools-the highest percentage amongst twelve European countries surveyed (PFEG, 2013b). However, along with the new mandate, there will be challenges to overcome. For instance, compared to core subjects like English, Maths and Science, the time allowed for financial education would still be relatively lesser. This would require some monitoring of how much can be taught in the allocated time and given the constraints, which topics deserve more attention. Also, financial education will be taught mainly in Mathematics, Citizenship and PSHE (Personal, Social and Health Education). This requires careful coordination efforts so that children can acquire knowledge and accumulate skills over time. The teachers involved in financial education should also know where to seek training and teaching resources. Overall, there would be new challenges in making sure that such a mandatory financial education curriculum will achieve maximum impact desired by policymakers.

Another two related issues would be to ascertain what should be taught in financial education and determining how to assess the impact of financial education. With regards to what should be taught, PFEG is advising the DFE on this and being the UK’s leading financial education charity, confidence in this area is high. To assess the impact, there needs to be a strong support from the research community especially from the academics in the field of educational assessment. Besides testing knowledge and skills using objective tests, children’s attitudes could also be assessed using surveys, interviews or class observations. Views of financial educators could be sought as they would have first-hand knowledge about teaching content and experience in delivering various personal finance topics. Given that curriculum time is limited, assessment results would be beneficial in highlighting areas of weaknesses and these would then be given more priority for the next batch of students.

In summary, these new challenges for schools in terms of implementing a compulsory financial education curriculum are likely to emerge in the near future. However, they can be overcome with continuous monitoring and refining of the financial education curriculum with the concerted efforts and support of external organisations together with other financial education experts so that hopefully the next batch of school leavers would be more confident and able in making informed personal financial decisions.

References

All Party Parliament Group on Financial Education for Young People (2011) Financial education & the curriculum. UK: All Party Parliament Group on Financial Education for Young People.

Financial Services Authority (2002) Personal finance teaching in schools. London: Financial Services Authority.

Financial Services Authority (2004) Financial Capability: consumers’ views on developing their financial capabilities through schools and workplaces. Financial Services Authority.

Financial Services Authority (2006) Personal finance education in schools: a UK benchmark study. London: Financial Services Authority.

Personal Finance Education Group (2013a) [Online]. Available from: www.pfeg.org [Accessed 21 January 2014]

Personal Finance Education Group (2013b) UK demand for financial education in schools is the highest in Europe. [Online]. Available from: http://www.pfeg.org/about-us/news/uk-demand-financial-education-schools-highest-europe [Accessed 21 January 2014]

Further useful links:

Personal finance education group

Discounting financial literacy: Time preferences and participation in financial education programs

Financial Education: Lessons Not Learned & Lessons Learned

Financial Education and the Debt Behavior of the Young

Financial Literacy and Planning: Implications for Retirement Wellbeing

Raising Household Savings: Does Financial Education Work

How to teach financial education

Image Source : http://commons.wikimedia.org/wiki/File%3APiggy_bank2.jpg

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