This month marks the second anniversary of the inclusion of financial literacy on the national curriculum in England. Following years of campaigning, a petition signed by 118,000 people, and a parliamentary debate, the change to the syllabus was introduced in September 2014. Two years on, and there is still much to be done.
The benefits of teaching children financial literacy are not under debate - the battle here has already been won. At a time when the level of personal and household debt in the UK is higher than at any other point in history, it is now more important than ever to instil in children financial confidence and competence for their long-term success and economic well-being.
As it currently stands, children in key stage 3 are taught about the functions and uses of money, the importance and practice of budgeting, and managing risk. Pupils in key stage 4 are taught about income and expenditure, credit and debt, insurance, savings and pensions, financial products and services, and how public money is raised and spent.
Though the inclusion of financial literacy on the syllabus is definitely a step in the right direction, we shouldn't see this as the end of the debate, rather the start of the journey and there remain challenges that need to be addressed.
Improving education in schools
For a start, we need to ask ourselves whether it's right that financial education be left up to schools.
The pressure on teachers to achieve strong exam results is well documented. Increasing competition for university places, changes to grade boundaries and easy access to school league tables have all served to increase this pressure. Teachers often simply can't find time to teach non-core subjects, meaning that financial literacy is being squeezed out of already packed school timetables. Of course, this needs to change, but in the meantime, would it not make sense to do more at home?
What's more, the changes made to the curriculum in 2014 only apply to around half of the schools in England. Academies and free schools have the freedom to teach outside of the prescribed syllabus.
Added to this is the cost of proper implementation. Some schools, particularly those with enterprise or business specialisms, have wound business and money management modules in to the curriculum. Other schools partner with local business or charities, such as Mosaic, to help provide mentoring and the development of practical business skills.
However, for the majority of schools this is not possible. Access to the right resources, content, as well as the proper training for teachers, is expensive and therefore in short supply.
Perhaps we ought to consider whether financial education should extend beyond the school gates. We should think about doing more, as parents, at home, to ensure our children grow into financially competent adults.
There is an added benefit to instructing children at home: it provides a hands on opportunity to learn about money.
Knowing is not the same as doing. Financial literacy is not the same as financial competence. Knowing how to balance a household budget, or how to access appropriate levels of credit, are not the same as actually living a lifestyle commensurate with one's income and outgoings, and developing a healthy attitude towards money and managing it responsibly.
It's crucial not only that children understand the theory, but also develop positive behaviours and habits. Lessons might be drawn from the campaigns to improve children's diets, famously championed by Jamie Oliver. Despite significant improvements to school meals and education, real progress in changing eating habits was slow. It was not enough for children to simply know what a good diet looked like; engagement with parents as well as children became key to successfully embedding change.
To really entrench responsible financial behaviour, we need to not only teach children at school but engage with them outside of the classroom, too. Young people need to learn first-hand how to spend and save responsibly.
They need to develop positive habits, adopt good behaviour, understand the value of money and, most importantly, be allowed to experience budgeting, saving and spending in a controlled, safe environment.
We need to engender positive, responsible attitudes towards money if we want to avoid the pitfalls of the excessive, dangerous use of credit we've witnessed in the last 20 years.
If we give young people the chance to learn this responsibility from a young age, in the home as well as in school, then we can ensure positive outcomes for their future and ultimately the financial health of our society and communities.
The changes brought in in 2014 represent a positive step but we must not stop there. We must continue to push for improvements in the curriculum and give schools the time and the resources they need to teach effectively. Lastly, and perhaps most importantly, we must work with our children to give them the tools to develop financial confidence and competence.
Want to know if your child understands the value of money? Try asking them these questions:
- If you earn £5 a week, but have to spend £2 a week on the bus to school, how long will it take you to save £18?
- What's the difference between credit and debit?
- What's the difference between a credit card and a debit card?
- Which is the better offer: Buy one get one free or 50% off?