Two-thirds of young Brits enter adulthood ‘financially illiterate’
New research from Compare the Market and the finance charity MyBnk has found that just two in five young adults understand finances well enough to make good decisions during their lives.
Less than four hours per month of financial education for pupils age 11 to 18 could give them the tools they need to navigate day-to-day spending as well as major money decisions, they said.
According to the research, those who did receive financial education lessons were taught for only 11 minutes per week.
‘Lack of financial confidence’
Mark Bailie, chief executive of Compare the Market, said: “Everyday life is full of financial decisions, and many of these can be overwhelming if you don’t have the tools to help you secure the best outcome for yourself.
“We know that most people leave school with an inadequate grasp of basic finance. This lack of financial confidence and understanding can have a real impact on their adult lives, limiting the choices of financial products available to them and with the potential to significantly increase the amount they pay throughout their lives.”
Although state secondary schools do teach money issues, not all schools are required to do so, including academies and private schools.
Help from parents
The research also suggests that the majority (63%) of financially literate children who did not receive that education at schools had been taught by their parents or guardian. Because of that, MyBnk said schools should distribute “guides” or “toolkits” for young people and their guardians.
The organizations urged the Government to guarantee 30 hours a year of financial education for every 11–18 year-old. MyBnk said the school day needs to be looked at to see how to fit it in, perhaps by shrinking the time spent on other subjects or folding it into the curriculum on other topics.
Teachers, of course, would need to be closely involved. The majority (57%) surveyed said they believed that making more efficient use of the school day is the best way to find additional time and working with financial-education charities.
Effects on mental health
Leon Ward, chief executive of MyBnk, said the data was “deeply concerning, especially given the current economic crisis and its impacts on wellbeing. Wider research shows that rising costs are the major worry for over half (56%) of young people, who reported it caused disruption to daily life, particularly their diet and sleep – two cornerstones of good health and wellbeing.
“Improving the financial capability of young people can help them cope with this situation, and prevent serious future problems, including poor mental health, unemployment, and homelessness.”
The companies also suggested creating an awards programme, to be run by the Money and Pensions Service or the Department for Education or equivalents in the devolved nation, that would celebrate students, teachers, parents and others who provided excellent financial education.