Millions of children will find themselves gaining a better insight into money matters as the new school term gets under way.
Financial education has been included in England’s national curriculum for the first time, bringing it into line with the rest of the UK.
The move means that personal finance will now be taught in secondary school citizenship education lessons, helping the next generation to understand how money is used and the importance of setting and managing a budget.
Teenagers will learn about credit, debt, insurance, savings and pensions, along with other financial products. The financial education elements of secondary school maths are also being strengthened, with the new curriculum putting an explicit statutory emphasis on “financial mathematics”.
Many of those sitting in these classes will be on the brink of getting their first real taste of financial independence. This could mean anything from working out how to live on a tight budget as a student to getting a first job and calculating whether or not you can afford to fly the nest and juggle your rent and utility bills on a starter salary.
Being armed with their new-found financial know-how should put young people in a better position to do this.
And as they travel through life, having some basic building blocks of financial knowledge will help the next generation to work out the cheapest way to borrow money, pick the best savings products for their needs, or argue their case when it comes to complaining about a financial product they’re not happy with.
At present, the Government-backed Money Advice Service (MAS) estimates that consumers lose £428 a year by misunderstanding financial terms and conditions or simply not reading them at all.
Hopes are also high that better financial knowledge generally will help to nip the possibility of future mis-selling scandals in the bud. For example, some £16 billion has been paid back to consumers as a result of the payment protection insurance (PPI) mis-selling scandal, which continues to rage on. The financial ombudsman says that seven out of 10 cases it sees are still about PPI.
Campaigners have welcomed the new emphasis on financial education, but they also say this should be seen as just the start.
A survey of teachers recently carried out by charity pfeg (Personal Finance Education Group) found that 83% said money skills should be taught at primary school level to be most effective, and 70% are seeing evidence that children are encountering financial decisions earlier in life than they used to.
Pfeg’s director of education Steve Stillwell says: “Financial education’s new place in the national curriculum is an important leap forward for our cause, but there is much more to do.
“We know from experience that the earlier financial education begins, the more effective it is in giving young people the money management skills they need.
“We need to see this taught from a much earlier age, in all primary schools, as well as in the growing number of academies and free schools that are not bound to follow the national curriculum.”
As with many aspects of life, children will often copy their parents’ habits when it comes to money.
Mums and dads can do their bit to help children understand money by kicking off light conversations around the subject from an early age, whether it’s chatting to them about prices as they’re being taken around the supermarket, or simply letting them handle coins and notes.
WHAT... DO CHILDREN NEED TO KNOW ABOUT MONEY?
Pfeg has compiled a rundown of aspects of money it would like children to understand by the time they reach certain ages:
By seven years old:
:: Know there are different coins and notes with different values
:: Understand that money is needed to buy things you need or want
:: Be able to keep money safe in a purse or money box
By 11 years old:
:: Be able to plan and manage a simple budget
:: Understand where money comes from, including earning money through work
:: Know that you can save money to buy things you need or want later
By 14 years old:
:: Know how to keep track of money and how much you are spending
:: Be able to resist pressure to spend money unwisely and act as a savvy consumer
:: Understand how to protect yourself against internet scams and identity fraud
By 16 years old:
:: Know how borrowing works and the risks involved
:: Be able to weigh up risk and reward to make informed financial decisions
:: Understand income tax and the difference between gross and take-home pay
By 19 years old:
:: Be able to research the costs of leaving home, starting work or continuing to study
:: Understand the need to save, both for short term emergencies and for the future
:: Know how and when to find advice about money and personal finance