The government’s decision to include financial education into the new draft curriculum in schools couldn’t have come at a better time. There is a whole generation out there who are poorly equipped for dealing with their own finances and for whom financial knowledge around even simple matters such as bank statements and overdrafts is limited.

Recent research commissioned by Barclays and pfeg (the Personal Finance Education Group) revealed that out of nearly 2,000 14-25 year olds, almost half were unable to interpret a bank statement, one third didn’t know the correct meaning of APR in relation to loans or credit cards, and one in eight didn’t know what an overdraft was. These findings highlight the importance of equipping young people with the knowledge and skills they need to manage their money properly.

Michael Gove and the Department for Education have addressed this problem and I warmly welcome the government’s decision. Schools will now have to teach young people about citizenship rather than simple maths; topics such as budgeting, insurance and reading payslips will form part of the curriculum and establish themselves as a fundamental part of the education system.

There is a wealth of research of the benefits of personal finance education for adults, and a growing base of information specifically for pupils. By having a generation of young people who are financially literate, they will not only improve their own prospects from a personal finance perspective, but also potentially that of their siblings and parents.

The knock on effect of improved individual knowledge will also be felt by the country and broader economy as a whole, helping to encourage a generation of people more akin to the idea of saving, managing a budget and paying off debt. This has to be good news for everyone, from government, to schools to the financial services sector.

I believe children must learn about finance from an early age; pocket money, birthday gifts, shopping trips and even piggy banks can all be used as learning tools. Pocket money is, in reality, a budgeting exercise which can only help young people develop.

If we start properly equipping our young people with financial skills from an early age then we may be able to avoid further financial challenges ahead. Our challenge is to properly invest in our best asset – the next generation. If we don’t, we will all suffer the consequences.

Kirstie Mackey is head of LifeSkills at Barclays