When I went to school, back in the 1990s, we were not taught Financial Literacy. Anything I learned about finance as a child was from my parents and from having a strange (?) interest in and attraction to finance related items such as cheque books, paying in slips, calculators, cash registers and of course real money… I often say I “just fell into” being an accountant but perhaps the signs were always there that this would end up being my choice of career.
Apparently now, financial education is part of the school curriculum (from the House of Commons website):
“Financial literacy education became part of the National Curriculum for the first time in September 2014, as part of citizenship education in key stages three and four (ages around 11-16). This required it to be taught in local authority maintained schools.”
According to The Organisation for Economic Co-operation and Development (OECD)1:
“Financial literacy is a combination of financial awareness, knowledge, skills, attitudes and behaviours necessary to make sound financial decisions and ultimately achieve individual financial well-being.”
About ten years ago, the company I worked for at the time was asked by a local school for volunteers to teach teenage students about financial literacy. The idea was to prepare them with being independent with money. A few of us Finance Managers went along and we taught them about budgeting and how to write a cheque (a skill which is irrelevant now I think) and about bank accounts. The kids were really enthusiastic and I could tell they appreciated our efforts as they gave us positive feedback and thought it was all interesting (yep, accountants can be interesting…). As I write this I realise that this volunteering took place in September 2014, which is the date referenced in the quote at the beginning of the article. Perhaps the two day session was the way this particular school addressed the requirement.
Financial literacy encompasses various aspects of personal finance, including budgeting, saving, investing, borrowing, and understanding financial risks.
Budgeting - understanding how to track income and expenses and developing a plan to manage money to ensure necessities are covered before discretionary spending.
Saving - recognising the importance of setting aside money for emergencies, short term goals and long term objectives like retirement and understanding different savings accounts options.
Investing - learning about different investment options such as shares and bonds and understanding risk, diversification and compound interest.
Debt management - understanding how credit cards, loans and mortgages work.
Financial planning - setting goals for the short and long term.
Taxes - knowing how tax is calculated.
Insurance - what it is and why it is needed.
Retirement planning - understanding pensions.
Consumer protection - knowing how you are protected as a consumer and how to raise a dispute.
Financial tools - becoming familiar with banking apps and other online platforms.
I asked a teenage relative if they knew what financial literacy was - the answer was “not really”. This made me wonder what is being taught in schools if it is supposed to be part of the Curriculum. I explained that it is about knowing how your finances work and how to look after them. As I was met with a slightly confused look I asked a few more questions and I realised that financial education should not just cover the topics I listed above but also the basics such as understanding different types of bank accounts, understanding payslips, knowing the difference between a debit and credit card. I promised that I will attempt to explain these things through my writing and was told that was a good idea but I must keep it very, very simple.
Enhancing your financial literacy will help with:
Improving your decision making
Avoiding debt
Building wealth
Economic security
Being ready for retirement
In future articles I will delve deeper into these areas.
A copy of the report can be obtained here: