New financial capability projects targeting young people have sprung up around the UK but many were in the pipeline long before schools were tasked with taking the issues in-house. With schools inevitably focused on other subjects that lead to exam results, there is an opportunity for partnership but have they made links and pooled resources?
As a group, young people may never have faced a more uncertain financial future. More personal responsibility for pensions, options for home ownership and rapidly evolving banking and welfare systems mean money management prowess is more vital than ever. Research published in the past few weeks has also revealed how patterns of financial-decision making start in childhood and how poorer families are often programmed to fail.
In a blog for growthbusiness.co.uk, Young Enterprise CEO, Michael Mercieca writes: “Research shows that adult spending and financial habits can be formed as young as seven. Considering this, an informal pocket money lesson does not seem enough to create a change. Young people need to have these vital skills in life and neglecting them will have a widespread negative impact on future workforces and businesses. All areas of the education system need to be adapted.”
Elise Pacquette works in schools delivering Bridging the Gap, which includes a ‘Language of Money’ module, with pre-teen children and their parents together. She feels schools and parents could both use more support and guidance: “I think families leave it too late to talk to their children about good financial management. We actively encourage families to involve their pre-teens in some of the small financial decisions at home such as shopping and budgeting so that by the time they are handling their own money they are prepared to make the right choices to sustain a healthy relationship with money.” The idea is to talk through budgeting, reducing costs and prioritising.
Beyond schools, landlords, finance institutions, utility companies and local authorities are all direct stakeholders in the ability of all adults to stay on top of their money. Many support or run local projects investing in young people.
Young mum Dayle was referred to Hyde Housing’s Money House project in Woolwich, London. Working exclusively with 16-25 year olds, its week-long programme takes place inside a real flat and avoids the formal education setting many young people want to escape from. “I learnt so much, I didn’t want to leave,” she says. The Money House helped Dayle understand how to prioritise her bills and the importance of making contact with people in authorities, which can seem intimidating for many, especially younger people. “It helped to grow my confidence as well, being able to speak to people when normally I get nervous.”
Tom Gardiner, Special Projects Manager at Hyde Housing, says: “We feel that the trick with education on financial independence is that it needs to be delivered at the right time. Too early and kids will not see the relevance. Too late and debts have been racked up already.” The Money House works with the local authority to engage young people as they move into housing. Schools, he says, are not always best placed to deliver consistently good advice: “The feedback we’ve had anecdotally from our colleagues in other organisations is the curriculum is being followed but the standard of provision varies enormously from expert charities being brought in for regular sessions to non-specialists delivering material now and then.”
In the US, campaigning group Jump$tart The Coalition for Personal Financial Literacy found that teaching financial education courses on their own had little impact, according to The Economist. More effective is guidance when consumers are confronted with issues, like moving home or being in work and considering a pension.
There is a distinction between financial education (or literacy) that schools might deliver and financial capability and resilience, which can only become ingrained once individuals are really using what they’ve learnt. According to users of Cashpoint, one of the Big Lottery’s financial confidence programmes, learning can help prevent young people feeling bullied by companies into spending more than they need. Run in Bristol by youth project 1625 Independent People, who support young people with housing, training and employment opportunities, Cashpoint not only provides training for young people it sends them out as Peer Educators. One of them, Charlie, says: “It is a real eye-opener for pupils. Some people have a reasonable idea of the costs of things, although others have no idea at all, but most are really shocked when they find out how much they would have to live on. It’s a good reality check.” According to Cashpoint manager Mel Lavin, some schools are “biting our arm off for these sessions as there is a consensus that young people are leaving school without good financial awareness”.
In May, the Personal Finance Education Group hosted a network meeting where projects targeting young people presented on their progress. Many had corporate backing. PFEG itself spoke about My Money Week that took place in June and its national ‘Top Trumps’ competition supported by Visa Europe. Pensions firm Redington presented findings from its Age of Responsibility research into young people’s attitudes to saving. Virgin Money was credited for its support of The Fiver Programme run by Young Enterprise for 5-11 year olds.
PFEG merged into Young Enterprise over the past year. This may seem to relegate financial education in status compared to business but Michael Mercieca argues the two inter-relate because employers need a workforce with problem-solving, planning and the skills for general resilience. Also in the growthbusines.co.uk blog, he argues that while schools need more support now, that challenge is only going to get harder:
“70% of teachers state their pupils are encountering money and financial decisions earlier than they used to, while 60% of adults believe managing money is more difficult than it was ten years ago.
“Developing young people’s financial literacy and capability from a young age would ensure they have the ability to make intelligent financial decisions and manage their personal finances confidently. Through financial and enterprise education, young people become productive and entrepreneurial, benefitting business and the economy.”
There is a growing body of research demonstrating the need for interventions during school age. In June, the Joseph Rowntree Foundation published Psychological Perspectives on Poverty. It argues that unless action is taken, negative attitudinal and even biological factors are programmed into children from poorer backgrounds. It also directly links the same factors to ill-health and a self-fulfilling lack of self-belief.
Another report by the RSA, Wired for Imprudence, released in May, outlines thinking patterns that could be challenged during the school years to make us all better decision-makers around finance. As such, it argues theoretical financial education in schools is not enough, young people need to experience the benefits of changing the way they think. It’s limited, it says, what teachers who are not financial capability experts can achieve on their own.
There is undoubtedly a lot of on offer to young people but it seems there is still some way to go before it makes a dent on the financial capability of the population as a whole. Schools are far from focused on financial education and the emerging consensus appears to call for better linkages with expert agencies with engaging programmes. In turn, they will need investment to help scale them up and increase their reach and impact and big business is clearly a stakeholder in this. More coordination and some closer integration will be required not only between teaching theory and living experience but also between knowing the right thing to do and feeling motivated to act on it.
See Quids in! Managing Editor's blog on what a Quids in! school might look like...