So, let’s talk about money. We all want it and we all need it. Our lives may not literally be dependent on having money, but the exchange of cash for goods or services is vital to everyday living. Whether it’s to pay for the roof over your head (and the bills that come with it), medical prescriptions or to enjoy the simple luxuries in life, money is a necessity. But do we really know what we’re doing with it?
“Education, education, education.” That’s how Tony Blair headlined the Labor party education manifesto during the 1997 general election. Fast forward 22 years later and there seems to be a severe lack of it – in terms of financial literacy at least.
In fact, our first steps into the murky waters of money management usually happen until enter our collegiate years where many young people finish college and go to university.
But the conversation surrounding the complexities of money management, and how the lack of financial literacy can lead to spiring debt, is hardly the top of the agenda when we discuss taking our first steps into higher education.
And when I think about the setup of our education system in general, I’m left feeling rather unsettled and always seem to come to the same conclusion.
The education system itself is set up for one thing: how to get a job. Why aren’t we ever taught about money, how it’s produced and how we can make it work for us, rather than, us, work for it?
Even the way we’re taught to navigate society to financial freedom is money-adjacent and, quite frankly, still remains rather outdated; you go to school, then to university, get a job, work up the career ladder, get married, save money (if you can), buy a house (if you can) and retire; next generation, Go!
But in 2019, it’s a path that’s not necessarily achievable by all, and for some, it’s a rather redundant way of looking at financial freedom. Furthermore, it completely omits the practicalities of saving money, day to day money management and the economic barriers faced by the most marginalised people in the country.
Data from the Joseph Roundtree Foundation indicates that white working-age people have historically had the lowest risk of poverty in the UK in the last 20 years.
People from Bangladeshi and Pakistani backgrounds have continuously had the highest and second highest poverty rates respectively, with black, Chinese and other ethnic groups not far behind. And that’s not taking into consideration how poverty rates affect working-age people with disabilities either.
Furthermore, the annual report, which examines the nature and scale of poverty across the UK, also indicated that Black/African/Caribbean/Black British working-age people are even more at risk of poverty than they were five years ago.
Throw together these ‘shocking’ findings, along with cuts in state programmes such as Tax Credits, the marginalisation of LGBTQ people of colour and you’ll find that the current recipe for financial freedom leaves you with a rather bitter taste in your mouth.
A state of crisis
According to research by University College London and the University of Cambridge, England and Northern Ireland are facing a “crisis” in financial literacy skills. Research indicates that a third of English and Northern-Irish couldn’t work out the correct change from a shopping trip or work out simple discounts on everyday items.
When it comes to managing debt, the statistics are even more disturbing. In 2017, Citizens Advice reported a ‘34% increase in the number of under 25’s seeking help with high-cost credit in the last two years’ and claimed that failure to cope with high-cost credit, such as payday loans, was one of the main reasons for the increasing number of young people seeking advice.
We all know that financial institutions rely on financial illiteracy from the general public, but with Brexit inching closer in an uncertain economic climate, I find it rather perplexing that the government’s education policy, up until the last five years, has been void of imparting the fundamentals of basic money management.
Change is on the horizon…well, sort of
Although financial literacy within secondary education has been scarce, to say the least, efforts have been made by the government to spotlight this grey area in the education system. In 2014, financial literacy was implemented in the national curriculum for 11-16 year-olds.
As part of the citizenship programmes of study for key stages 3 and 4, the national curriculum now aims to help children to ‘manage their money on a day-to-day basis and plan for future financial needs’. This includes, ‘the functions and uses of money, the importance and practice of budgeting and managing risk’. As well as ‘income and expenditure, credit and debt, insurance, savings and pensions, financial products and services and how public money is raised and spent’.
That sounds great on paper, but there’s growing sentiment that the government’s attempts to educate children on basic financial management is failing.
A recent survey by Young Money cited that some of the biggest concerns were around money management, including university students opening store cards, their approach to store cards themselves and failure to educate young people about the complexities of credit by credit vendors.
That’s no surprise when you consider some retailers are offering students store cards with an APR as high as 29.9%, plus interest.
The Young Money survey points to the speed at which technology is advancing as another major concern, particularly by teachers. Students simply aren’t conscious of how the finance industry impacts their day-to-day lives including the growth of mobile technologies and the rise of fintech businesses. One teacher, who participated in the survey, indicated that it’s an area that educators must address.
But in a society where we reluctantly talk about our finances to our friends let alone to total strangers, is your everyday secondary school teachers really equipt with the skills to educate the students on the fundamentals of money management and the evolution of the global financial ecosystem?
Although it’s compulsory to provide secondary school children with basic financial education, the legislation doesn’t even apply to free schools or academies.
According to Russell Winnard, a former teacher who is now Head of Programmes and Services at Young Money, only 35%-45% of schools were delivering financial education in 2014 – rounding off to only 40% two years later.
If you dive into the Young Money report a little further, you get a true picture of the challenges teachers are facing when providing a well-rounded and informative guide to money management.
There’s a growing appetite from older children, who are approaching the end of school, for detailed information and guidance on financial matters. Some teachers simply don’t have the support from the school system, or even the knowledge themselves, to meet these expectations.
Understanding the difference between good and bad debt, the pressures from the media to engage in consumer culture and financial accountability are some of the many issues that are neglected in the curriculum. And teachers simply lack the necessary mix of confidence, expertise and skill to feed the refined appetites of young people today.
And we haven’t even mentioned how we talk about money management in the home or the importance of discussing how race, class, gender, disability and sexuality can impact how one accumulates wealth; a topic that the government, and people in general, seem to nonchalantly tiptoe around.
There’s also a sort of sinister irony about a government that decides to impulsively introduce financial literacy as an add-on to the curriculum in an education system where teachers are either spiralling into debt themselves or are simply struggling to make ends meet due to rising living costs.
If we really want to provide our children with the financial freedom that they deserve, we first need to understand that poverty and wealth are inherited, both in the monetary and cognitive sense.
With the disproportionate rates of poverty held against people of colour and disabled people, money worries can often become a sore topic and it’s the kind of trauma that we’re reluctant to want to pass onto our children – for obvious reasons.
However, no matter how uncomfortable we may feel talking about money or our individual financial situations to others, it’s a necessary ongoing dialogue we need to have with our children – even if we lack the confidence or knowledge. And that knowledge needs to shrouded in a positive way of thinking.
By the age of 3, children have already grasped the basic principles of money. And by the time they’re 7, money habits have already been set.
But how to do we arm our own children with the fundamentals of money management and the awareness of acquisitive institutions that will bombard them with financial products in later life?
Chimaechi Allan, Senior Digital Editor for the Money Advice Service, has put together a practical guide detailing the ways you can talk to your kids about money, including building confidence and consistency, giving pocket money responsibly as well as the importance of learning from mistakes.
There are also links within the guide that provide practical examples of how to talk about money to children in different age groups from 3 all the way to eleven-years-old.
The education system has a long way to go when it comes to meeting the evolving expectations of eleven to sixteen-year-olds. Financial literacy is currently being taught by multiple teachers from multiple departments.
And these teachers are under immense pressure to maintaining a cohesive, progressive and consistent financial literacy offering while still having to deliver exam result objectives.
While recommendations have included providing more support to teachers, making the ‘Economic’ element of PSHE focus on finance education (that just sounds like common sense to me) and splitting maths into ‘key skills’ and pure math.
We’re a far cry from relying on the government and the school system to give our children a helping hand to guide us into real financial freedom. The only thing we can actively do right now is to educate ourselves accordingly and pass on what we’ve learned down to our children.