Credit, Collections & Insolvency News
The Education Select Committee is set to propose that financial education should be introduced in primary schools as part of PHSE classes.
Research by Hargreaves Lansdown carried out last year found that three quarters of 18-year-olds don’t understand the rules around borrowing or what a share is whilst two in three 18-year-olds don’t understand inflation, interest rates or pensions.
Sarah Coles, Head of Personal Finance at Hargreaves Lansdown said “They might pass their SATs, GCSEs or A-Levels, but there’s a reasonable chance kids are set to get an F for finances. At the moment, they emerge from the school system horribly unprepared for looking after their money. The move to include personal finance education into primary school education would be a welcome step forwards, but it’s not a silver bullet.
“Clearly something needs to change. At the moment, an awful lot of people will emerge from school and be responsible for managing their own budget and dealing with student debt. So it’s alarming that at the age of 18, three quarters of them don’t understand the rules around borrowing. And it’s not just everyday money management that causes confusion. While a healthy 55% of 18-year-olds have grasped the finer points of savings, only 32% know what a pension is, and only 28% know what a share is. There’s a real risk that unless people learn these lessons, they won’t understand the potential growth available through investments – or how to get started, so they could pay the price throughout their lives.
“Part of the issue is that we don’t start early enough – which is why the move to introduce personal finance education in primary school is so sensible. However, financial lessons can’t start and finish in the classroom. It means that whether or not these changes are implemented, parents will continue to play a key role in supporting financial education.”