Moves Towards Financial Education Welcomed
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Proposals by the Financial Services Authority (FSA) to make personal finance a compulsory part of school education have been welcomed.
Today John Tiner, chief executive of the FSA, claimed that by ensuring young people have "basic levels of financial competence" they could be able to develop a better knowledge of monetary products such as personal loans and savings as they progress through life. "I would hope that Ed Balls, in his new role as Secretary of State for Children, Schools and Families, will be able to ask his new colleagues to find room for financial education on the mandatory core curriculum at the earliest opportunity," he added.
His comments follow calls by the ifs School of Finance and a number of other organisations to require all schools to offer students the opportunity to study for a qualification in personal finance, in a similar way that they currently do for other subjects such as history and foreign languages. Gavin Shreeve, chief executive of ifs School of Finance, claimed: "We are delighted that the FSA have recognised that financial education needs to have a much stronger place in the curriculum than the current non-statutory arrangements."
Mr Shreeve also pointed to independent research carried out by the University of Manchester which revealed that 95 per cent of students who took a course with the financial firm were consequently able to manage their finances better. "Adding personal finance to the list of qualification options at age 14 would give financial education an equal footing with a wide range of other subjects and lead to a step change in the number of young people leaving school with the necessary skills to manage their own finances effectively," he added.
The announcement is the latest in a series of calls to improve the country's financial awareness. Earlier this year, the British Bankers' Association and Building Societies Association urged to the government make education on areas such as loans and mortgages a compulsory component of the curriculum. Meanwhile, 85 MPs signed a parliamentary motion calling for all secondary schools to be made to offer a stand-alone qualification in personal finance.
Consequently any move to improve financial education could be a boost for Britain's young people. According to research by Credit Action, less than 40 per cent of those under the age of 30 would know where to go for advice if they develop debt management difficulties. Meanwhile, some 15 per cent of 18 to 24-year-olds believe that an individual savings account (Isa) is an iPod accessory with one in ten deeming it to be an energy drink.
The financial charity also pointed to research indicating that 80 per cent of those aged 16 to 24 do not keep an eye on their financial situation, with some one in five claiming to be unaware of how much money they have to the nearest £100. Overall, some 25 per cent of all British adults were said to not know how much money they spend over the course of a week, which in turn may cause these consumers to encounter difficulties budgeting and making loan repayments.
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Abbi Rouse writes for AllAboutLoans.co.uk
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