Alison Pask, Managing Director of Financial Capability & Community Outreach at The London Institute of Banking & Finance, writes on the importance of financial education and how her organisation is helping the younger generation become confident in managing their money.
Under proposals announced in the Spring Budget, Chancellor Philip Hammond confirmed that the Government will provide an additional £500m of funding to expand a new range of “technical” qualifications to sit alongside the existing A-level system. According to the accompanying press release, one of the key drivers for the reforms is to improve the work-readiness of the next generation.
What this means for schools is that even more consideration will need to be given – and at an even earlier age – towards preparing their pupils for their life beyond the school gates, be it leaving to continue in full-time academic education, or considering a work-based apprenticeship, or technical pathway. It means that even more time will need to be given to developing the life skills that further education colleges, universities and employers are looking for.
Chief among these, we believe, is financial education. The ability for young people to understand their finances, be able to plan for both the present and the future and confidently manage their money is one of the most important skills a young person can develop. We are all, for instance, aware that many students run into financial difficulties at university either through mismanaging their loans and having to budget for the first time, or simply not understanding the terms and conditions set out in the small print, regarding repayment and interest. This is perhaps not surprising, given our Young Persons’ Money Index shows that up to two thirds of post-16 students leave education without ever having had a lesson on money management.
Under these new technical qualifications, maintenance loans – broadly similar in function and operation to student loans – will be made available to an even wider body of students. Presumably though we can expect similar outcomes with these maintenance loans, of rising student debt and personal financial mismanagement, given this dearth of financial education in the post-16 space.
For schools then, preparing their students to be able to manage their money and understand the financial options available to them for further study, will only become more important. But, as our work with schools – we provide financial capability qualifications to more than 25,000 teenagers each year – shows, we know that the provision of financial education is falling far short of its intended objectives and leaving too many teenagers unprepared in facing their financial futures.
Although it has been a statutory part of the curriculum since September 2014, our research reveals that at GCSE level and below, a majority – 52 per cent – still do not receive any form of financial education. And among those that do, 79 per cent receive, on average, less than an hour a week of dedicated classroom time. Only 2 per cent said they had ever had a conversation with a teacher about money. All of this collectively leads to a concerning range of outcomes; 61 per cent say they worry regularly about money, 35 per cent have never carried out a financial transaction of any sort, independently, while only 3 per cent have ever planned a budget. What hope then for those students looking to manage their student, or maintenance loans?
While these are all big issues to tackle, we also know through our work in schools that it is, for the vast majority, not a case of a lack of will, but rather a lack of resources. In an overcrowded curriculum, how do we ensure financial education is given due prominence? How do we fund effective resources and programmes of study for schools to use/employ? How do we give teachers themselves the confidence to deliver this complex subject matter? These are all questions that we and everyone else with an interest in the success of financial capability are looking to answer and, through the work of the All-Party Parliamentary Group are working towards an effective solution.
Regardless of whether students ultimately decide to take an academic or a technical pathway, an effective programme of financial capability should sit at the very core of their educational development, at school, long before they choose which route suits them best. For these new pathways to be a success, we must empower schools to drive forward the key skills which they require and we will be lobbying the government to ensure they do.
For more information on The London Institute of Banking & Finance’s financial capability programmes, please visit: www.libf.ac.uk/study/financial-capability
Alison Pask oversees The London Institute of Banking & Finance’s Financial Capability and Community Outreach Programmes, which provide financial education to teenagers. Since launching a decade ago, more than 200,000 teenagers have gained one of these qualifications. Having taught financial capability for more than seven years, Alison has a firm understanding of the impact it that can have on young people and their future aspirations and works with school leaders to deliver effective programmes of learning.
About The London Institute of Banking & Finance:
We prepare young people for life in modern Britain. Our qualifications help schools instil the knowledge and confidence their pupils need to make good financial decisions, as well as inspiring the next generation of finance and banking professionals.
Our learning programmes, qualifications and wider community-based initiatives focus on the everyday financial skills needed and essential skills employers say are missing. And through our financial champions in schools, membership and higher education qualifications, we make the banking and finance sector more accessible and attainable.
Since launching our financial capability programmes more than a decade ago, more than 200,000 teenagers have studied towards gaining a qualification and are now proficient in managing their own finances and making responsible financial decisions on leaving school for university or starting their careers. The qualifications are offered by more than 500 schools throughout the UK, from independent schools and academies to grammar and free schools.
For more information, please visit: www.libf.ac.uk
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