Money is a touchy subject for some people. Whilst some of us prefer not to discuss our finances, many people struggle to make ends meet every month. Finance eventually becomes an unavoidable topic. More than 50% of people in the UK have experienced mental health issues as a direct result of money worries – and we need to find out why.
One answer is that children are lacking a proper financial education. Children are rarely taught valuable life skills, such as how to budget and pay bills. Once these children reach adulthood, they struggle with their finances. Along with business liquidation experts, Business Rescue Expert, we will explore why we need financial education.
Why do children need better financial education?
Recently, certain financial topics have been added to the national curriculum. These include savings and investments, pensions, mortgages, insurance, and financial products. It’s still a relatively recent introduction to schools, so not all teachers may feel confident in teaching it yet, due to the specialised, complex nature of the topics.
There is also the matter of religious differences in the approach to and teaching of these finance lessons. Followers of the Islamic faith are prohibited from using any form of compound interest. This relates to things like conventional mortgages, student loans and car loans, all of which are commonplace in many other cultures.
Because of these factors, there are many difficulties when it comes to making financial literacy universal, understandable. Maths might seem like an obvious place to drop lessons of finance in amongst existing content, but debate is rife as to whether subjects like trigonometry are still deserving for a place on exam papers, when finance lessons could take their place and provide long-lasting life skills.
Life skills such as finances can be complex to teach in schools. Lessons in finance differ from core subjects like English and Science, as they provide valuable life and business skills which, if not learned, will be detrimental as kids grow older and enter adult life. One UK primary school created its own bank, to combat ‘below average’ financial literacy learning.
Despite financial literacy being introduced to the national curriculum in England in 2014, not everyone believes that school is the place for financial education. Some believe the duty should be on parents to teach their children the real value of money and how to approach it.
It’s worth noting that in private schools, faith schools, and academies, it isn’t a compulsory part of the curriculum, so many youngsters would still miss out on these lessons. A lot of schools who do incorporate it into the school day compartmentalize it into general ‘citizenship’ lessons, but it’s arguable whether enough emphasis is placed on it here.
Millennials and finance
Judging by the results of countless studies, it is evident that millennials have large gaps in their knowledge about finance management. Millennials’ spending patterns stand in stark contrast to their predecessors; they’re keen to splash out on experiences and don’t often take to the idea of big commitment purchases seriously — for example, houses.
Millennial spending habits signify the disparity of their knowledge and attitude towards budgeting — research has found that 60% of these youngsters said they are willing to spend more than £3.11 on a single cup of coffee, while only 29% of baby boomers would splurge for caffeine.
A lack of financial literacy in education has undoubtedly played a role in this, with many young people under the illusion that simply earning a lot of money means that you’ll never be in any debt, along with a general unwillingness when it comes to making sacrifices for the sake of budgeting.
One survey found that 42% of teenagers said they wanted their parents to talk more about finances, and a staggeringly low 32% said that they knew how credit card fees and interest worked. Teenage years are pivotal points for learning, so why is financial literacy being left out?
Hopefully the future will hold the increased popularity of these lessons to remedy this lack of financial literacy. These skills will prove invaluable for youngsters as they progress through life, and they could eventually counteract the stereotype of a financially irresponsible or illiterate millennials.