Our Principal, Louise Woollard, recently shared her thoughts with The Yorkshire Times about the importance of financial education for young people. If you missed the original write-up, you can catch up here.
Young people represent the direction of our future, so ensuring they’re confident in organising their own finances is not only crucial for their personal wellbeing, but for the economic good of the country too. This is what Louise Woollard – Principal of financial advisory firm Louise Woollard Financial - believes. And given it’s results season, there’s no better time for her to share some further thoughts about the critical role financial education plays in our society.
From piggybanks to mortgages, money is a significant part of everyday life at any age. But as the adage goes ‘old habits die hard,’ so when it comes to learning about the importance of money, budgeting and saving, it’s crucial to start the process as young as possible. If followed through effectively, this will prepare children to be able to independently understand and manage their finances as they progress through to adulthood.
In reality, half the problem is that finance is often regarded as a dry and somewhat scary subject, but really this is all borne from the fear of the unknown. The truth is that when applied to real-life situations and delivered in an engaging way, financial education serves as a valuable lesson for children of all ages.
As a result of being shied away from – at both home and school – keeping track of income and outgoings is often not a priority for people in their late teens and early 20s. This is something that needs to change, good habits need to be instilled at a young age.
From personal experience delivering financial education programmes in schools, it appears that unless they are taught by a third-party – or a teacher has a particular interest in planning a lesson on the subject – they don’t have a consistent place on the national curriculum. And this is perhaps the greatest concern.
Our schools’ performances are largely ranked for their maths and English aptitudes, so it’s no wonder more time is dedicated to achieving high results in these areas – it has to be. However, given vital life skills such as financial management can’t be measured so clearly, this often leads to the topic being overlooked.
And while Pythagoras may be important for passing an exam, what about compound interest, student loans, utility bills and pensions – issues that require managing in real life? Doesn’t it therefore seem a bit of a disconnect that financial education isn’t also part of the maths syllabus?
With a study by Money Advice Service and the University of Cambridge revealing that money habits and skills begin forming between the ages of three and seven, this is surely indicative that change is needed.
In truth, initiatives are popping up all over the place, from companies in the USA like Pockets Change using hip-hop workshops to make financial literacy more fun, to The Principal Building Society in Wales, setting up monetary reward schemes for young people and their parents. Yet while this is encouraging to hear, it isn’t ensuring that pupils across the whole of the UK are on the same page.
Therefore, if we look at who’s best-placed to teach children about managing their own funds, it would be unfair to say that this is solely down to parents – as some will not have been educated in this area either – or put the onus on teachers, who are notoriously time-poor. A solution with more momentum and a country-wide message would be inclusion in the national educational framework – this would also help to bridge the knowledge disparity which currently exists.
Just as language-learning evolves in tandem with age groups, financial education should too. For instance, from reading books in primary school about saving acorns, to lessons in sixth form on student money and wages, the teaching should be a stepping-stone approach that reflects the situations those particular demographics are facing.
If learning doesn’t start young, this can lead to wider issues in life after education – something confirmed by a survey in 2017 of over 2,300 university students, which uncovered that one in five students don’t track their monthly income and outgoings.
It’s alarming that such a high percentage of pupils looking into university or simply moving out of the family home don’t have enough practical knowledge about utility bills, council tax, overdrafts and loans.
In addition, the fact that not many students know that unpaid mobile phone bills can affect their ability to get a house in the future, is insight kids should be exposed to, to help them adopt more organised and money-conscious behaviour.
It’s no secret that the benefits of good finance management span far and wide – from personal wellbeing and reduced stress levels, to being less financially reliant on the Government. So, how can this be remedied?
If we start educating young people earlier in life about adopting sensible money habits, they’ll start budgeting savings at the start of the month and look at ways to make their funds last, instead of leaving it as an afterthought. Consequently, this would provide a solid foundation for a more economically aware and money-savvy nation which shares budgeting best practice with future generations.
For any financial management-related queries, please contact Louise.
Louise Woollard Financial is a Senior Partner Practice of St. James’s Place Wealth Management.
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