Life doesn’t always teach us what we need to know to manage our money. We talk to the people filling the gaps in financial education.
The other day, my mum was looking after my 3 nephews. Their playroom was a bit of a state, so she decided to use a bit of light bribery to get things shipshape: £2 each to tidy their toys away. To her surprise, it was the youngest, aged three, who came to collect the debt at the end: “Where’s my money?” in his meekest voice. I’ll admit I wasn’t expecting the littlest to come looking for his £2 first, but a deal’s a deal.
A study from a few years ago shows that children aged 6 and 7 can have a basic grasp of money: namely, that you get money through working, and can exchange it for items in shops.
It got me thinking. When do we start consciously choosing to teach children about money? Some clearly filters in from a very young age – whether that’s from family, toys or TV. And that same study suggests parents are often the main source of children’s information about money. So when and how do we teach children about navigating the financial system?
I suspect most of us expect schools to teach financial education – but with our own experiences that don’t necessarily tally with that. I left school 15 years ago, and personal finances are something we seldom, if ever, covered. And pensions weren’t discussed whatsoever – something we know is causing problems.
Earlier this year, the government published a study that found people’s attitudes to pensions are characterised by ‘detachment, fear and complacency’. That same report found that poor understanding is a part of the problem.
But there are people out there who are helping bridge that gap, so people feel confident with their personal finances.
Financial education for young people
Charities like MyBnk plant that seed at a young age, starting with children around 7 years old. They begin with content designed to encourage positive mindsets towards money. They’ll look at how we get money, different forms of payment and different kinds of bank accounts. They also look at making choices with money, needs versus wants, and understanding why people save. And they introduce pensions too.
For teenagers between 14 and 16 years old, MyBnk explores how pensions look and feel in your day-to-day life. They talk about auto enrolment, how your pension looks on a payslip, and the long-term trajectory of your retirement savings.
MyBnk works with more than 20,000 young people a year, and they’re doing vital work that schools don’t always cover. The refrain MyBnk often hears when adults find out about the work they do is ‘we wish we’d had this’. And that’s true for me too – it would’ve made my first payslip much less alarming.
Something that often surprises people is that financial education does form a part of the secondary school curriculum – that’s the curriculum for 10 to 16 year olds. But 80% of secondary schools in England are academies, and academies don’t have to follow the national curriculum.
What’s key when you communicate with young people is that you speak to them in a way they’re going to connect with. That’s why MyBnk trainers have proven experience engaging with young people. Many are former teachers or youth workers.
And it’s something Quietroom’s really interested in too. With auto enrolment likely to start at 18 soon, it’s important that the pensions industry – used to talking to people in their 50s and 60s – learns how to communicate with those about to enter the world of work.
But the need for financial education doesn’t vanish when you’ve finished school, and there are companies out there helping adults understand their finances. Take Better With Money: they help working people get to grips with their money. They currently work with around 140 different businesses to offer workplace financial education to employees.
Better With Money covers a whole range of financial topics that affect people at different stages of their life. With those at the start of their career, they’ll cover reading your payslip, and tax and National Insurance contributions. A little later, they might cover things like how to handle your finances when you have a child. And for those later in their career, they might cover losing financial confidence because of divorce or menopause.
Pensions is one of the core topics they cover. When it comes to pensions, people are more interested to learn about consolidating their pots, charges, funds, tax benefits, and missing pots.
Plug and pay
Children acquire most of their knowledge about money by observing their parents. But active discussion of personal finances isn’t as common. That’s where financial education at school needs to come in.
It doesn’t have to be the case that people feel fear and complacency when they think about their personal finances. If we can tackle one of the leading reasons why people don’t engage – poor understanding – we can empower people to feel confident about other aspects of their financial lives.
With places like MyBnk and Better With Money plugging the gaps left by schools, people can start their working lives on surer footing with their pensions. That means there’s a far higher chance of them engaging with their pensions, making informed choices about their contributions, and finishing their working lives with the money they’ll need to get by.