Sharon Davies, CEO of Young Enterprise, says that the right financial education could inspire a generation of capable, future employees
Financial education has the ability not just to transform the lives of young people across the UK but the economy more broadly.
As we begin to emerge from the economic and social consequences of widespread restrictions and uncertainty, unlocking the capabilities of the next generation of employees and entrepreneurs will play a vital role in ensuring the country is ready to thrive post-pandemic and work towards a better future.
Almost half of adults cannot pass basic financial knowledge test
At present, the level of financially literacy in the UK is not where it should be. A recent survey of 2,000 UK adults showed that almost half of adults cannot pass a basic financial knowledge test around key areas including savings, investments and retirement.
As young people are growing up in a complex and ever-shifting financial landscape, with pressures and uncertainty around products, methods of investing and ways of earning money, financial education has never before been as crucial, with educators, policymakers, parents and young people awakening to the necessity of ensuring that the next generation feel comfortable discussing money.
The scale of the issues cannot be underestimated, with the Money and Pensions Service revealing that 55% of people don’t feel comfortable discussing their financial situation, whilst 67% of young people do not feel confident planning their financial future.
Financial education has the potential to help young people thrive
It is time to reframe the notion that financial education is just about adding up and instead, that is has the potential to help young people thrive and open up opportunities for them.
This starts by educating children whilst at primary school when they are forming their mindset with money, shaping their financial capability into young adulthood and beyond.
Despite being on the secondary curriculum, financial education has not in the main, taught young people the intricacies of how to unlock their financial capabilities and opportunities and it is vital that this is addressed head on.
Young people should be able to understand how to make the most of their money whilst balancing the world of financial risk and reward.
They must be taught the different ways of budgeting, of saving money, and how to analyse and assess the successes of their saving habits whilst on the other hand gaining a deep insight into best practice of borrowing and how to leverage personal debt.
Crucial to help young people with 21st century issues in finance
More fundamentally, we need to focus on making sure that young people feel not just in control of their money but are able to use it to the best of their ability, starting with ensuring that young people feel prepared for the workplace and are able to earn and look after their money.
Whilst it is incredibly important to focus on the capabilities of young people and instill a sense of an enterprising mindset, it is also vital to help them navigate the potential pitfalls that exist in the 21st century. The world is becoming increasingly cashless, with investment opportunities such as stocks and shares and cryptocurrencies available to young people at the push of a button. With this comes exposure to financial misinformation on social media and scam advertising, something that didn’t exist ten years ago.
Alongside promoting positive financial education and promoting the capabilities of young people, it is equally important to help young people recognise and navigate these challenges.
At Young Enterprise we are passionate about developing the financial capability of the next generation of young people. That’s why we launched “My Money Matters”, a digital programme designed to help young people thrive in today’s society and develop a positive mindset with money.
Considering the impact of financial education on boosting social mobility will be key to our work. A recent study found that poorer children were “years behind” their peers when it comes to managing money, with the financial skills of 15-year-olds from socio-economically disadvantaged backgrounds similar to those of 11-year-olds from advantaged backgrounds.
If we are to truly reframe the way young people view the role of financial education in in helping them build their futures, it is crucial that we enable them to build a healthy relationship with money, alongside addressing the root causes of inequality. An ever-shifting world presents young people with an incredible opportunity, and with collaboration between schools, the third sector, governments and employers, we can ensure that we inspire a generation of financial capable young people to turbocharge a recovering economy.