Financial literacy and the lack thereof is a major concern in the UK. Financial products are now more complicated than they used to be, and can be bewildering to all but the most sophisticated investors. Sadly, at the same time, many young people are not engaging with the world of personal finance, compounding the problem. It is important that they are taught sound money management lessons from early on in life. So, let’s take a look at some organisations which are helping young people and their families to do just that, and some of the initiatives they are using to achieve their goals.
The Money Advice Service is perhaps the best known organisation aimed at helping people of all ages to understand money and learn money management. It advertises across a variety of media, including TV, radio and online, as well as on billboards. MAS also does much research into the impact financial literacy initiatives are having on those who come into contact with them, concluding that the most important issue surrounding money matters is behavioral: in other words, people are influenced by those around them and by emotional factors, so they need to be taught to learn the habits of sensible financial planning – from early on, and through a variety of influences. This is underpinned by the fact that more than two thirds of parents do not feel well-qualified to advise their children on anything money related.
Another organisation in this sector is pfeg, (the Personal Finance Education Group). Pfeg’s mission is to help school children (and their teachers) understand personal finance, and works with schools to offer a rigorous and dedicated curriculum for young people aged between 3 and 16. Looking at areas including effective money management and becoming a critical consumer, it offers consistency by using four areas as a bench mark to help young people understand personal finance. Pfeg goes further than this though, and works with a number of schools which are now personal finance ‘Centres of Excellence’: in these schools, pupils of all ages receive some financial education, and teachers, including a ‘champion’ at each school, are trained to teach this material effectively. Pfeg is also working with a number of universities to ensure that trainee teachers are financially literate.
If pfeg concentrates on classroom-based learning, then MyBnk, a social enterprise, does the opposite. This company runs money management workshops for young people aged between 11 and 25, and was conceived after its founder, Lily Lapenna, spent time working on a micro-finance project in Bangladesh and was inspired by the financial savviness of the women who were involved with the project (they had set up small businesses using loans, and were repaying these, on top of supporting families, often on their own). MyBnk uses practical lessons to teach about personal finance, recently setting up a scheme where school children run a bank using their classmates’ savings as deposits (with special dispensation from the FSA). They can then use this money to provide interest-free loans for those in their local community, so they get into the habit of saving, and also learn important lessons about the mechanics of the financial services industry. It has also launched Unidosh, aimed at those going to university.
The ifs School of Finance is also involved heavily in this area, and was the first body to offer qualifications specifically in personal finance to those aged between 14 and 19, so roughly GCSE, AS-level and A2 levels, as well as, latterly, degrees in the area. This program seems to work as a powerful motivator for young people, especially those who are less interested in academic subjects: it gives them the chance to gain a qualification in something that will be of practical value throughout their lives. The ifs also runs a virtual stock exchange for Year 12 pupils, which has proved extremely popular as a useful and practical introduction to the world of finance and investments, as well as teaching about how to manage risk.
Several of the large banks run programmes aimed at helping young people understand their finances and Lloyds Banking Group’s Money for Life programme is one of the more established. Aimed at young people, one of its objectives is to enable them to learn by teaching other people important lessons in managing their money, which was highlighted in its recent Money for Life competition. Here, a £500 grant was offered to those who could most successfully improve the money management skills of those around around, while, at the same time improving their own – amongst the most memorable entrants included a group who organised a buffet party for 40 people for £40, as well as running a series of sessions for those in their local community on healthy eating on a budget.
So, much work is being done in this area, as the above examples illustrate. But more needs to be done, and more collaboration between organisations is vital if we are to begin to undo some of the bad financial habits that have become entrenched in the UK in recent decades.