Why we all need to be financially savvy: getting financial education on the agenda
By Vicky Duckett on Monday, 20 July 2020
Let’s be honest, 2020 is not how we envisioned, planned or hoped. We are navigating through a period of ultra-low interest rates, turbulent markets, reduced incomes, major job losses, soaring costs – the list goes on. No one knows what the future holds and this uncertainty can make us feel uneasy. But if this period has taught us anything, it is that we need to become more savvy with our money. And this not just because of effects of the pandemic. It may be a major factor, but so is the fact that as a society, we’re living longer, and as the cost of living contines to raise, how we plan for our future needs to reflect these changes.
Now is the time for us all to bolster our money skills and perhaps more importantly, ensure we’re teaching younger generations about money early on so that they can prepare for the tough decisions that lie ahead. Avoiding unnecessary mistakes that could significantly impact them in later life and giving them the financial headstart we may wish that we had at their age.
According to Financial Capability, young people who say they had financial education are more confident with their money. They are more likely to save frequently, have a bank account, and be confident at managing their money. All-important skills which will be even more vital in the months, years and perhaps even decades ahead.
Despite this, only four in ten young people say they’ve had some form of financial education at school. But why should school be the only outlet for them to learn these essential skills? Think about how money is a factor in every part of our lives, whether thats at home, in day-to-day life, social media, traditional media, gaming, influencers, TV and movies. I could go on....
Every day we make financial decisions, some without even realising it. You have an income, a bank account, pay rent or a mortgage, pay into your pension, household utilities, not to mention the tap, tap, tap with contactless payments. Our list of financial obligations is endless. At the same time, we have more financial freedom than ever before. We can switch bank accounts, mortgage providers, insurance companies, where we shop, where we save, how much we save, all at the drop of hat. We are in the driver’s seat for our own financial well-being and this means the responsibility is mostly on us, so we need our young people to be educated and ready.
I have found that the best way to teach children is by getting them involved. Teach them how to earn money by doing chores around the house. Encourage them to save their pocket money for the toy they desperately want. Teach them about budgeting by giving them their own mini shopping list and a small amount of money when you go grocery shopping. Teach them the value of items by giving them a daily snack allowance, where an apple costs 20p, an orange 20p, but more luxurious items, such as a bag of crisps cost 80p. Give them a pound and see what they spend their money on. This not only teaches them about the value of items, but also how to budget and save. Games night could focus on money, for example playing Payday or Monopoly. It’s about making money fun and interesting.
Which is something The Bank of England (BoE), Beano and Tes are trying to do. In a joint venture they have developed Money and Me, which sees old favourites, Dennis the Menace and Roger the Dodger teaching youngsters about money in a set of 12 lessons. The resource, which launches in July, will sit within the Personal, Social, Health and Economic (PSHE) curriculum. It aims to equip primary school children with a better understanding of financial concepts and give them the knowledge, skills and confidence to manage money now and in the future.
We also need to make young people part of the conversation about money at home. Interestingly, children are naturally better at talking about money than adults. As we get older we struggle to talk about our finances, it remains a ‘no go’ subject. In fact, we’re more comfortable talking about our relationships than we are about our finances. But this is something that we must learn to overcome. Talk about money as a family. Explain to your children the good and the bad. Teach them financial abbreviations such as APR, VAT, FTSE and how money works. If you're looking for a good place to start, the Young Persons Money Index by The London Institute of Banking & Finance released last year found that 83% of children want to learn more about money. It will help you understand where interests lie and might even help you understand things better yourself. Let’s make 2020 the year we get financial education back on the agenda!