84 per cent of British young people receive no financial education, but that’s not our real problem
The Chartered Institute for Securities and Investment (CISI) said yesterday that it supported a private member’s bill introduced by Thomas Docherty MP to include financial literacy in the national curriculum.
A study in July found that 84 per cent of young people aged 18-25 hadn’t received any formal financial education. But it would be interesting to find out how formal financial education affects decision-making: if young people understand basic financial concepts, from inflation and interest rates, to stocks and shares, or how banks operate, will they be less likely to take out payday loans, max out their credit cards or take out unaffordable mortgages?
You could easily argue that financial training didn’t prevent bankers from excessive risk taking. Then again, until this year, financial advisers weren’t required to hold more than the equivalent of an A-level in finance.
I remember once speaking to Christopher Jones-Warner, who teaches communication to wealth managers. He said that at his training sessions for financial services personnel he asks attendees to raise their hands if they ‘have a financial plan’ are ‘working that financial plan’ and therefore ‘expect to retire comfortably.’ He estimates only around 22 per cent of his audience raise their hands. If professionals aren’t planning their finances sensibly, what hope is there for the rest of us?
This makes me wonder, perhaps the problem isn’t one of formal financial education, but something more informal and more difficult to teach in a classroom— a question of ethos. It seems to me that it’s more important that people are less reckless when it comes to taking on debt, than that they can tell an examiner what a derivative is.
Read more by Sophie McBain