A fresh approach by Ofsted and the new Money and Pensions Service (MAPS) offers two routes to UK youths finally receiving a meaningful financial education. Members of the Youth Financial Capability Group (YFCG), an alliance of the UK’s leading providers of financial education, who last year reached nearly 500,000 young people, share what they think it will take to forge a financially capable generation.
“It’s a mystery to most that despite virtually unanimous support for all young people learning how to bank, budget, save and borrow, it has not happened. We, members of the YFCG, believe, with active support, it can.
The need is abundantly clear. From as young as 16 or 17, young adults make significant financial decisions including choosing whether to go to university and consequently building up to £50,000 of debt. They are likely to live lives of heightened uncertainty, and risk with their increased personal responsibilities. Those working in the gig economy will have more flexibility but less security. Those on low or no pay will have to navigate the fledgling Universal Credit system. ‘Generation rent’ become the victims, not the beneficiaries of 30 years of house price inflation. All are exposed to the UK’s £21bn yearly advertising spend, a voracious gambling industry, peer pressure, and FOMO.
What exactly to do about this is not an unknown. There is more than enough evidence and capability to help plot a course towards financial literacy. Better financial products and protection are necessary, but education from an early age is the key. We need to prepare young people to gain the skills, knowledge and motivation to use money constructively and avoid the significant negative consequences of poor financial decisions.
A class act
A meaningful financial education is one that is relevant at specific ages, helping to build capability as freedoms and responsibilities increase. Very young children at primary school don’t generally make money choices. Their ‘wants’ and ‘needs’ are met by adults. But habits build early: as young as seven according to the Money Advice Service (MAS). This is the perfect time to introduce concepts, get children comfortable talking about money and develop positive behaviours that can become lifelong habits.
At secondary school, children make decisions using their own pocket or birthday money, or even a part-time-job, to act on their ‘wants’. We can introduce more detailed knowledge and skills in the context of their lives and choices, building capability to prevent future problems and the resilience to cope with the unexpected. Those 16 and above and approaching adulthood must consider ‘needs’ as well as ‘wants’. More specialised knowledge, practical skills and strategies are introduced to enable and support independent living.
Quality marked resources are freely available. Thanks to ‘Money Saving Expert’ Martin Lewis, every school received a financial education text book and the YFCG created planning frameworks covering every age group from 3 to 18. We know that to improve impact, effectively engaging young people is vital. In group sessions in familiar settings, outside experts or trained-teachers make a big difference and, for young adults, peer-led sessions supported by trained advisors are effective. In contrast, the evidence is that unsupported resources and technology have limited impact.
Time, scale and ensuring consistent quality are the main barriers.
Schools struggle to prioritise the time to prepare and deliver a specialist subject that is not examined, inspected or required to progress to the next stage, especially when the Department for Education (DfE) give little mandatory time to it in the curriculum. It becomes vital that the limited time available is used effectively through concentrated, relevant sessions using experts or well-supported teachers. We must further look to extend time outside of school hours through supported, external content accessed directly by students.
It is hard for schools to ensure consistent quality in a minority specialist subject. According to MAS offshoot, the UK Financial Capability Strategy, only 52% of 5-17 year olds say they have had any sort of financial education, let alone something meaningful. Provision is mixed and uneven, in particular, for the 16+ group. It is not sustainable to expect unsupported teachers to continue to go above and beyond in the classroom. Unlike in academic subjects, most will lack the deep and relevant specialised subject knowledge. Nor can we rely on well-intentioned but lightly-supported volunteers who lack teaching skills and life-stage-relevant expertise.
A YouGov study by YFCG member MyBnk and funder MUFG Bank found that 54% of parents agreed that schools should spend more time teaching personal finance, and 56% would cut time from the core national curriculum to ensure their child received more money lessons in things such as budgeting and how to avoid unnecessary debt.
A way forward
Members of the YFCG bear the cost of the investment needed in quality across tens of thousands of teaching hours. We have well-developed systems to select, train, test, support and monitor expert trainers, support teachers, and evaluate outcomes. Programmes are built with young people and monitored to ensure relevant and high-quality materials.
Last year, the DfE decided not to allocate specific time and resources to money lessons as part of Personal Social Health & Economic education. Instead it made other life skills such as sex and relationship education compulsory. We can’t afford to wait for a change of mind so must do the best we can within the constraints.
Schools must consider whether and how they prioritise investment in their own staff. Those that choose to have resources and support at their disposal, if not there are outside experts available. Ofsted’s proposed new inspection framework, presently under consultation, should help. In making a judgement about personal development under the proposed new framework, inspectors will seek to evaluate the intent and quality of what a provider offers, but will not attempt to measure the impact of the work on the lives of pupils. The framework suggests “outstanding” schools must “consistently go the extra mile” for the personal development of pupils.
MAPS must not lose momentum. With a renewed mission to help everyone manage their personal finances and a solid strategy including ‘financial education for all children and young people’ they must build on the excellent work of the MAS and Financial Capability Strategy for the UK. This leads logically to commissioning what works and influencing others to get behind validated strategies. We stand ready to work cross-sector to help make this happen.
Learning about money still costs money. Corporates, trusts and foundations who care about making a real and significant impact can support what is proven to work at scale, breaking down practical barriers and unlocking meaningful financial education for all young people.
The formation of MAPS is a unique opportunity to challenge the assumption that all that can be done to improve people’s financial literacy has been done. Armed with evidence, purpose, funds and resolve, this coalescence represents the best chance in a generation to tackle the traditional and evolving challenges of managing money in our society”.
This article originally appeared in the FT Adviser and is authored by:
- Guy Rigden, CEO, MyBnk.
- Alison Pask, Managing Director of Financial Capability & Community Outreach, London Institute of Banking & Finance.
- Michelle Highman, Chief Executive, The Money Charity.
- Russell Winnard, Director of Programmes and Services, Young Enterprise & Young Money.
About the YFCG
Collectively, the YFCG designs and delivers workshops; create and quality mark resources; train teachers and youth workers; set study plans and examinations; research, seek and evidence impact; and collaborate to achieve the best possible outcomes for young people.
To find out more please contact [email protected].