Financial education: Do you know how money works? If you do, I’d like to hear about it.
On an average, people can spend over two decades of their lives in education because it is where our knowledge starts to develop. It is the point in time where you understand what you want to pursue in your career and what transforms you. Education provides a path of development, skills and knowledge but there seems to be something missing. If we can learn how to drive at 17 years old and create social media profiles, why can’t we learn about Financial Education? We spend so much time in academia learning subjects from mathematics to history to science, but somehow Financial Education is not in the syllabus; it is considered ‘below average’ at teaching in the UK.
We live in a world full of options but without the knowledge of expense until a later age. What age should people start learning about saving and the value of money? Schools and universities provide business and economics, but they are mostly a theory-based study on supply and demand rather than understanding how to manage money and avoiding reductions or debt; one of the main catalysts in mental health nowadays. What is the difference between debit and credit? Most students who had loans cannot pay the amount back until they reach the age of 30 or above.
Financial Education should become a focal point in education; covering all sectors. The Independent writes: “one in three in England and Northern Ireland cannot work out the correct change from a shopping trip”. This is a study conducted by researchers at University College London (UCL). Is this due to lack of knowledge or an overuse of cards? Cash was the most-used way to purchase a product and now rarely used by the ‘new generation’, aka Millennials. Online shopping is considered a new preference but a risk factor to debt and credit.
Everyone’s lifestyle becomes costlier every year because ‘nothing is enough’. Salaries normally match the expense of a city, but people are not aware until a late age; they should be informed and prepared earlier. When you reach an understanding of what you want to pursue, it is probably already too late to organise your finances.
In the USA, parents start saving for their children’s education before pregnancy begins because tuition fees are one of the highest in the world; alongside the UK. In fact, additional stats from UCL reveal that “England has one of the lowest levels of financial literacy”. People need to fully understand how much money they’ll need and make basic calculations.
“It’s too expensive” – a comment we’ve all heard many times.
Financial Literacy [Education] is not only the study of how money works but also teaching how to prioritise; dividing the essentials and luxuries. Although we are distracted by our ways of life, when we venture outdoors, we are addicted (to an extent) to spending money; called dopamine. Have you ever gone outside and not spent even £1? We are surrounded by capitalism and consumerism daily; similarly, to seeing over 200 advertisements per day. We are not obligated to expenditure, but it seems to have become the norm. This is when Financial Literacy is useful: remembering the balance between essentials and luxuries.
We are in possession of our own money and therefore, we need to know how it works. The set of skills and knowledge can be studied and taught at any point but ‘sooner rather than later’. Forbes suggests that “Financial Literacy is the greatest gift of all” because it takes you through life. Have an open dialogue with family members and friends; money should not be a controversial topic or unrealistic. If people want to make something happen, they can persevere and remain realistic. If you watch too much reality tv, you could create a world that might not exist and lead to a negative outburst.
We already pay the price for many things in our lives, but we should not pay for financial literacy. The Guardian writes about an OECD study on young people’s approach to money and it is a “wake up call not just for parents and schools, but also for regulators”. Since there are so many products being sold, it is difficult to value them; this is an advantage for companies.
So, what might be the solution?
Providing an educational system that teaches the set of skills and knowledge that allows a student [or individual] to make rational and effective decisions with all financial resources. This way will help [young] people help with their expenses and prioritise.
Get involved in the conversation!
We’d love to hear from you. You can tweet us using #UMGTraining @UModernGov
If you would like to discuss any of the details you have read in this blog, please contact us on 0800 542 9440 or email [email protected]
Contact our In-House training team on [email protected] or call 0800 542 9414