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Financial Education for the nation… and its children

It was results week this week for schools and colleges around the UK, measuring children on their ability to pass exams, or perhaps this year on navigating themselves through the unfortunate events of lockdown and the newly founded Teacher Assessed Grades or TAGs as they’ve become known. It’s been a tough time for my children Olly and Bella, who thrive on the social interaction with their friends, so it seems unfortunate to grade children at such a young age on subjects they may never need.

Instead, I’d like the curriculum to be updated. Our financial world is more complex than ever, yet we’re still not teaching our kids how to handle it. We’re all able to buy shares in companies from around the world at a click of a button and make peer-to-peer lending investments via an ISA – without a word of financial advice or education!

How financially aware are we?

According to the OECD/INFE 2016 Survey of Adult Financial Literacy, adults in the UK score almost exactly in line with the average of 30 countries when benchmarked against an internationally agreed set of questions. This puts the UK 15th in the ranking against the 29 other countries that took part in the survey, just above Thailand and Albania; below the average for OECD countries; and well below France, Norway and Austria.

In 2019, a financial capability survey of children, young people and their parents was repeated. It found that, overall, children had a reasonable grounding in knowledge and understanding about money. They recognise some financial products and concepts, and know money has a value. Compared to the 2016 survey, fewer parents were settings rules around debt.

However, it also found that 37% of children aged between seven and 17 save monthly, and 63% have a bank account of their own. Children who never save are least likely to be confident in managing their money (only 28% of those who never save say they are confident, versus 63% of those who save very regularly).

More than just money

My grandma Shute would say, ‘It’s not how much you earn that counts, it’s what you do with what you earn that’s important’. Good financial habits are like manners and a balanced diet: you use and benefit from them, or you ignore them completely.

It is very reasonable for a young adult venturing into the workplace to save and retire with a pension of over £1m… but if they are never shown how to do this, how do we expect them to achieve it?

But this isn’t just affecting retirement plans. Research from the bank, N26, found that about 9.5m UK adults have suffered from mental health issues as a result of financial anxiety. Almost one-third (32%) of those say they struggle to sleep at night.

Managing your money is both a logical process of knowing what to do, and also a behavioural habit you need to learn.

This is why I wrote The Money Plan and why I share my easy-to-follow tips here and at Control your money: don’t let money control you.

For more financial information please search for The Money Planner podcast.

Some motivational tips to help you take control of your money:

  1. Live your life by design, not default – have a plan! What is your why? Saving money is not exciting, in fact money itself is quite boring, but your why is exciting and will keep you motivated.
  2. Get to know ALIE. ALIE stands for your Assets, Liabilities, Income and Expenditure, and is your best friend in getting organised financially. You’ve got to know your numbers.
  3. Try to allocate 50% of your household income to running costs, 30% to your general variable spending, and 20% to repay your debts – and then invest that 20% when they’re gone.
  4. Why you are doing this may be years or decades away, so to keep you on the journey you need to enjoy yourself along the way. Don’t mortgage your present for your future.
  5. The pandemic has brought home how precious life can be. Prioritise people over things and look for ways to live comfortably without borrowing.

Think ahead to thrive and survive financially as a student
Take the emotion out of your investing