We need to teach children about the difference between needs and wants when it comes to money, the importance of budgeting and saving, and how to borrow and make investments. Understanding the real-life implications for personal debt, understanding interest rates and how to compare market offerings helps people form a deeper, more practical financial mindset from a young age.
Against the backdrop of a rising cost of living, financial education has never been more important.
According to Santander UK, two-thirds of young people believe that a lack of financial education has led them down the path to debt.
While financial education should never be positioned as a way of addressing the causes of poverty, which are both complex and wide ranging, poor financial capability has been proven to negatively impact an individual’s life chances as well as their wellbeing.
With inflation continuing to rise, the budgets of many British households are under strain. This has led to a rise in financial vulnerability and a subsequent increase in financial scams. A report from the Financial Conduct Authority has found that investment scam reports have risen by 193 per cent in five years.
Most of these scams prey on the incentive to 'make money quickly' and encourage young people to invest in something with the promise of easy returns. Better financial education can enable the next generation to make informed financial decisions instead of trusting advice from unregulated social media influencers, which is not always accurate.
The position of the APPG report could not be clearer: more support is needed to deliver high-quality financial education.
To progress the report’s findings, we need to take urgent action and ensure support comes in the form of both structural and practical interventions; in particular, Ofsted, the schools inspectorate in England, conducting a series of deep dives into financial education provision, highlighting good practice and ways in which some schools have overcome the barriers that have been identified by the APPG.
Such reports from Ofsted would go a long way to supporting other schools on their implementation of high-quality financial education. Implementing action can make a step change in the financial capability of our youngest generations for years to come.
Sharon Davies is chief executive of Young Enterprise
