The mounting importance of personal finance education in schools
22 Oct 2021
“Financial literacy is important because it allows an individual to understand and maximise whatever level of income they earn. It helps people transform their lives” - Latoya Goree, Director, Office of Financial Literacy at UMKC.
Perhaps somewhat surprisingly, financial education has only been a compulsory part of the national curriculum in the UK for the past seven years. Yet our young people are facing a difficult economic climate and mounting student debt – as many as two in five students don’t understand their student loan agreement according to a National Student Money Survey, and 75% said financial education in school was insufficient.
This was echoed in the U.S. earlier this month as the need for personal financial education in high school is being given a further push. However, according to U.S. Secretary of Education Miguel Cardona, this needs to happen sooner rather than later. During an interview with CNBC, Cardona said: “When I talk to students now, they talk about the need for financial literacy learning in a practical sense — how to look at debt and how to plan for a financially secure future.”
“We can’t wait for a personal finance course in high school. We need to infuse it more naturally so that by the time they get to high school there’s a better understanding of it,” he added. According to Next Gen Personal Finance, in the U.S., a personal finance education course is a high school requirement in 21 states, but students aren’t obliged to take it. The Secretary of Education spoke out and said that following the pandemic, schools now have a chance to make changes to teaching methods as students return to the classroom. “I can’t think of a better time than now where we are as close to the reset button in education as we’ve ever been. I expect that as we reopen schools, we are aggressively addressing whatever instructional loss and time our students have had,” Cardona said.
Personal finance at school
According to a recent Save The Student poll, those questioned cited the following as some of the principal topics they wish they had learned in school.
- Making money last and the art of budgeting
- The dangers of getting into debt, and ways to manage it effectively
- Pension planning
- Investment and taxes
- The importance of saving
One of the many crucial lessons that the pandemic has taught us is the importance of being financially prepared for unforeseen circumstances. Having a sound financial education and knowledge of the basics such as money management, investing, savings and debt will stand you in good stead if taught from a young age. This is perfectly summed up by Cherry Dale, Director of Financial Education, Virginia Credit Union: “I think if people truly understand the way that financial systems work at an early age, or even later on in life—if they’ve made poor decisions but learn how they can go back and fix them and start planning for the future—they can then encompass that and take the steps to make a better life for themselves.”