Foundations of financial success ‘rest firmly in childhood'
- 25 November 2010
One leading independent financial adviser says schools should be responsible for sowing the seeds of sound financial knowledge
In the week that the government announced an overhaul of the school curriculum, Tina Weeks from Serenity Financial Planning says she believes crucial skills should be taught in schools.
Weeks says: ‘I strongly believe that the foundations for learning personal finance skills should rest firmly in childhood.
"Schools should teach at least the basics of saving, budget control, debt and investing with practical scenarios and simulated situations where children can grasp the concepts in action."
According to the Personal Finance Education Group (Pfeg), 93% of parents and teachers think personal finance education should be taught in schools.
Martin Bamford, managing director of chartered financial planning firm, Informed Choice, says he does not believe personal finance skills can be taught too soon.
"I think that it is important for schools to teach personal financial planning, as education is part of the solution to the debt problems people often get into when they leave school.
"While I appreciate the competing pressures within the National Curriculum, as a subject that could have such a profound benefit to society, personal financial education should be near the top of the list of subjects added to the educational calendar."
On the curriculum
Personal finance education is currently taught in some schools as an element of PSHE or personal social health and economic education, but it is not compulsory.
Ed Balls, the former secretary of state for children, schools and families, had said PSHE would become a statutory subject in schools from Setptember 2011. But the change of government means that will now not go ahead.
A spokesman for the Department for Education said a review is due to be announced, but that any plans to make personal finance education compulsory now won't take place until next year, or the year after.
Essential skills
Wendy van den Hende, chief executive of Pfeg agrees that schoolchildren should be taught essential skills to help them cope with money as adults.
She says: "What young people now have [to do] is make quite complicated decisions as they're leaving school, which will have an effect on their finances for decades to come if they're not careful."
This reflects the 66% of the Brits Pfeg surveyed who believe that finance lessons would have helped them deal with today's financial challenges.
Costly mistakes
A recent study carried out by uSwitch revealed that lack of financial knowledge has cost Britons £250 million.
Jason Witcombe a chartered financial planner with Evolve says: "Essentially, the principles of personal finance are straightforward. They could easily be taught to 16 year olds."
However he believes the responsibility doesn't just rest with schools.
"While most people would see a basic education to age 16 as a right in our society, I don't think we can all expect healthy finances courtesy of the State.
"Don't get me wrong, the means testing system doesn't make people rich in retirement. It just keeps people out of absolute poverty.
"But, we all need to realise that it is up to us as individuals to make our own provision if we want to be in the 55% or perhaps 25% who don't rely on State top ups.
"I saw a statistic yesterday that said that 45% of pensioners are currently on means-tested benefits today and that if no changes are made to the pension system, this will be 75% in 2050. This is an absolutely shocking number. "
Weeks agrees and says parents must also play a role.
She says: "The role of the parent in supporting this is paramount and it's in every day life that children should be given the opportunity to make, on a smaller scale, the sorts of decisions they would have about money as an adult."
However, Witcombe says elements of the financial services industry are also flawed.
"The way products are packaged and marketed and the complicated legislation that surrounds some of them can make it seem complicated and boring. "
Assessing the nation's financial wealth
Then there are the fees and changes being brought in by the Retail Distribution Review, he believes, are only set to make matters worse.
"While my firm has no difficulty finding clients who are happy to pay fees for advice, surveys suggest that our experience is not representative of the UK population as a whole.
"So, here's a question: If you had to pay an hourly fee to see your doctor and then an open-market rate for treatment and medication, what would you be prepared to pay and how often would you go?
"How serious would your ailment have to be before you went through serious financial pain to get it seen to? How often would you take your children?
"My guess is that the overwhelming majority of people wouldn't go, primarily because it would be unaffordable.
"It is in the nation's interest for people to be healthy and to feel financially secure but, somehow, people need to be encouraged to help themselves to build this financial security.
"In the days of "a job for life" and final salary pensions, this was done for you but things have now changed."
He adds: "Financial education in school has got to be a good thing but I don't think it is the only answer."
SEE ALSO: The biggest thing hampering your investment success is....you
Money worries dominate for Brits
