Should we be teaching children about finances in school?

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It was perhaps no surprise that Labour was able to appeal to younger people and got them voting; the stress of student finance and a pledge to scrap tuition fees was always going to bring young people out in droves.

Leaving higher education tens of thousands of pounds in student debt is one of those financial burdens that most young people seem aware of to some degree, but there are so many other similar issues that are less highlighted, and largely untouched in schools.

We’re not talking about mathematics, as only a certain subsection of us will bother with trigonometry and algebra in adult life. No, these are the much more useful skills which are currently seemingly glossed over. They would include:

  • How a mortgage works, and what might constitute a good or bad deal
  • How interest rates work, and what affects them
  • Percentages and what items of shopping cost in comparison
  • Efficiency of car engines and how to calculate it
  • Room and land sizes
  • Savings accounts vs ISAs vs stocks and shares
  • Budgeting

How often will these issues present themselves, compared to working out the friction of a block against a surface or the surface area of an irregular object? True, the purpose of taking these forward in life will be largely determined by the career you choose, but most people will not need them, or at least rarely.

That means the skills that we need to create a financially viable life for ourselves are there in essence, but not presented to us in an authentic fashion. So we then go to work and/or rent or become students or parents, while enjoying our leisure time and holidays, with no real financial knowledge to fall back on.

Wait, you might say – what about parents? Well, our mums and dads might be able to give us at least some information, but the drawback is that it’s likely to be largely based on their own experiences. Is a family that’s always kept dramatically within their means and lived a steady but unspectacular life the best to advise on loans and borrowing? Or, for that matter, a reckless bankrupt? There’s also recent research from financial firm M and G that suggests parents recognise they should teach their children monetary literacy – but one in six aren’t confident enough to do so.

We can’t know that a lack of parental advice and financial acumen on the curriculum has led to the explosion in public debt, now approaching £68 billion on credit cards alone. This has been a steady rise in the past decade, which oscillated in 2009/10 as the credit crunch struck, but has risen at some pace from 2013. It’s now beginning to concern the Financial Conduct Authority and the Bank of England, and so it will remain on the agenda for the government in upcoming years – no matter what shape it takes. The number of people contacting financial charities and advice centres such as CAB continues to rise.

One of the reasons for the debt increase could be the competitive nature of credit companies, offering money more easily than ever before. This could be ideal for some borrowers, and terrible news for others, and perhaps this pinpoints one last aspect of monetary wisdom; much of it is built with experience and life circumstance. Therefore, there’s no guarantee that what could happen in your financial future will be the same as what does happen – but there’s no harm in possessing a little knowledge. If that knowledge can be imparted in the learning environment of the classroom then all the better.

 

 

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