Only 47% of children have received a meaningful financial education from parents or teachers, according to a report by Money and Pensions Service (MaPS). This is 1% lower than the 2019 figure of 48%.

By including five and six years olds in the study MaPS estimates that 5.4 million children are lacking the knowledge they need in adulthood. MaPS is appealing to parents, schools, financial institutions, and funders to step in.

The report found that children who have received meaningful education through primary and secondary school are more likely to save, feel confident about money, and use a bank account.

Scottish children were the most likely to receive a meaningful financial education at 52%, followed by Wales (51%), England (46%) and Northern Ireland (43%).

Meanwhile, those living in a higher income households received better financial education. Higher income households achieved rates of 50% and lower-income households were at 44%. Families keeping up with bills were 7% more likely than those struggling to do so at 41% and children in urban areas were 8% more likely than children in rural areas at 40%.

Only 53% of those living in households with an annual income under £20,000 discussed finances with their parents during childhood. Households with an income between £40,000 to £59,000 were 8% more likely to have such conversations.

Sarah Porretta, executive director at the Money and Pensions Service, said: “These figures will alarm everyone in financial education because more than five million children could be going without.

“Our experiences in childhood prepare us for adulthood and learning about money is no different. It becomes a part of daily life and our financial decisions can bring real benefits and profound consequences, so it’s crucial to learn from a young age.

Improving financial literacy in UK children

MaPS aims for two million more children aged 5-17 to receive a meaningful financial education by 2030 as part of its 2020 UK Strategy for Financial Wellbeing.

Parents are encouraged to discuss finances with their children by integrating learning into everyday experiences such as shopping, budgeting, and wages from a part-time job. Talk Learn Do is a free resource available for parents to use.

Teachers, school leaders and governors are expected to collaborate to support children’s education at school. MaPS is investing £1.1 million to support those working with vulnerable children and is appealing to financial services and funders to increase their monetary support for financial education.

Poretta added: “The race is on to educate the nation’s children and everyone from banks and building societies to foundations and financial institutions has a big part to play. Parents and schools can also make a huge difference by combining money skills with everyday experiences, both inside and outside the classroom.”

Commenting on the findings, Sarah Pennells, consumer finance specialist at Royal London, noted that its own research painted a slightly more optimistic picture for financial education, with today’s parents becoming more open about financial education than previous generations.

She said: “Although the Money and Pensions Service findings show a clear lack of progress in engagement on financial awareness and money management skills in the 7-17 age bracket, Royal London’s own research shows that parents have become more open to talking to their children about money over the years. Three in four (76%) 18-24 year olds had spoken to their parents about money matters when they were growing up, in stark contrast to those aged over 65, where less than half (43%) said that they’d had conversations with their parents about money in their younger years.

“While it’s positive that parents are talking to their children, making them money confident involves more than conversations – however useful they are. If children aren’t getting enough financial education in schools or aren’t encouraged to, for example, understand how money works or to get into the savings habit early, they may find the money decisions they have to make later on in their life are that much harder.”