Tiktok does it. YouTube does it. Netflix does it. Talk about money, that is. But in the age of instant information, why isn’t personal finance taught in schools? Why doesn’t society encourage us to explore investing, alternative career paths and the importance of multiple income streams?
With new technology and social media channels entering our lives and tempting us into spending more than we should – or even making high-risk investment moves – I began thinking about why is there still no focused effort being put towards teaching kids how money works.
In fact, I created this blog because of this specific reason: lack of financial literacy and money education in schools – and in our society in general. Therefore, in this article, I’ll be exploring the reasons why personal finance isn’t taught in school and what we can do about it.
The current state of financial education in schools
Honestly, I was surprised to find out that the national curriculum in England has actually had some finance studies included under citizenship education since 2014. According to the Department for Education, the curriculum should:
- Enable all pupils to manage their money on a day-to-day basis, and plan for future financial needs.
Despite the curriculum, The Young Persons’ Money Index study 2020-21 reveals some intriguing facts about money and personal finance education:
- More than a third of people aged 15-18 say they haven’t received any financial education in school.
- As many as 67% of young people say they regularly worry about money.
- The vast majority of youngsters (83%) actually want to learn more about personal finance and practical money skills in school.
With the above in mind, it doesn’t come as a surprise that years after finance education was added to the curriculum, the UK is still below average at teaching financial literacy.
If you ask me, these numbers speak for themselves. So why is it that there still isn’t sufficient personal finance education in schools?
Why is personal finance education important?
Personal debt is at an all-time high, pension pots are falling behind and the number of people investing in ISAs is falling.
With rising house and rent prices, bigger university debts and slow wage growth compared to inflation, many are struggling to save money. In fact, a third of Brits have less than £600 in savings while 1 in 10 has no savings at all.
However, this could be turned around if greater significance was placed on personal finance education in schools. Today’s students need to gain financial confidence and money management skills to build a sustainable future for themselves.
Even short-term decisions, such as choosing a mobile phone plan or home insurance provider, require a level of financial understanding. Add to that a need to prepare the young generations for buying a house or planning for retirement. With this said, it’s clear that financial literacy has its place in the classroom.
Reasons why personal finance isn't taught in school
Despite finance education being part of the curriculum, young people are still lacking practical knowledge of money management. Let’s dive into some details that might help us find some answers.
1. Money is still a taboo
In many Western cultures, money is seen as a taboo topic. As children, we’re quietly taught to never discuss our personal finances.
Research from 2019 shows that half of Brits say talking about personal money matters is taboo in everyday conversation. Interestingly, this is more people that find sex (42%), religion (26%) and politics (14%) a taboo topic!
The study also found that a quarter of people in the UK have lied to family and friends about their personal finances. And 23% have fibbed to their partner about money in general, leading to 37% having arguments about their finances.
How can we possibly move forward with finance education if nobody feels comfortable talking about money?
2. Teachers lack financial literacy
Although financial education has been part of the curriculum since 2014, the government has put no resources into teaching it. Therefore, it’s no surprise that only around 40% of schools actually provide some form of money education. The reason behind this baffling issue may be partially because of teachers’ under-confidence.
According to a study by an investment platform Nutmeg, teachers don’t feel confident in their own level of financial knowledge. Shockingly, almost half of teachers score themselves at 5 out of 10 or lower when it comes to money knowledge! This certainly helps us paint a picture of why personal finance isn’t taught enough in school!
We wouldn’t have teachers teaching French or Spanish who don’t speak the language themselves so how do we expect teachers with a lack of financial literacy to teach about money?
This said, the education system has to step in and offer education to the teachers first. Not only do they have to educate teachers on personal finance, but they also have to help them improve their own financial situation. Only then we can expect to pass this knowledge to children.
3. Parents aren't fluent in money matters
So if schools don’t teach enough personal finance matters, where do kids learn about money then?
Going back to The Young Persons’ Money Index study, a whopping 75% of youngsters say that most of their financial understanding and knowledge comes from their parents. This can of course be great if your parents are savvy with money – but what if they’re not?
The financial education kids receive at home can depend massively on their family background. For example, children of entrepreneurial parents with property wealth would learn very different things about money compared to children whose parents are in a constant debt cycle. When a parent makes bad choices with finances or has debt problems themselves, these money habits tend to transfer over to their kids as well.
Finally, many parents even find it daunting to talk about money with their partner. So regardless of parents’ financial situation, if they find money a taboo and a difficult topic to discuss, how can they teach their kids about the topic?
While parents’ role in personal finance education unarguably remains important, it’s the education system’s responsibility to provide equal learning opportunities to all children.
4. The system is lagging behind
What I mean by this is that times have massively changed but society is struggling to keep up with it. And the education system is no exception.
I’m sure you’re familiar with the “good” old life advice that goes something like: Study hard, get good grades and find a high-salary job. Stay with the company for 40+ years and in exchange, they’ll pay you a generous pension.
This might have worked for the past generations but we Millennials or Gen Zers are not buying this. According to a Future Workplace study, 91% of Millennials expect to stay in a job for three years or less. Money is not the first or even the second, priority for many. Instead, 20 and 30-somethings equate job satisfaction with good benefits and doing what they love. In addition to 9-5 jobs, side hustles and exploring financial freedom have become more common among these generations.
In addition to the mindset change, there have also been various practical changes when it comes to money and career. The pension, tax and legal systems have changed drastically in the past couple of decades. This means you’re now responsible for your own retirement savings and finances.
Schools are still teaching us the whole ‘get good grades and a high-paying job’ shabang – but that’s not enough anymore. If you want a secure retirement and a financially stable life, a university education or a fancy job isn’t going to be the answer alone. Financial literacy is what you need for today’s world – powerful information on how to grow wealth has never been more important than now! Unfortunately, society hasn’t caught up on this yet.
What can we do to push money education forward?
Regardless of finance now being a part of the curriculum, students don’t feel school supports them enough when it comes to personal finance education. This highlights that the current solution to financial education still isn’t having the required impact.
We now understand some reasons why personal finance isn’t taught enough in school. But how can we improve things? And whose responsibility is it to teach kids about money?
In order for drastic progress to be made in the educational system, all members of society need to take action: the government, teachers, parents and students themselves. It starts with each individual being willing not only to take responsibility but also to share their voice so they can help shape a better future together.
Understandably, changes like this don’t happen overnight. However, there’s something we can all start doing today to help: talk more about money. Normalising conversations about money can help us make better financial decisions and improve our relationship with money. Long-term, this can help children and the younger generations to form good lifetime money habits.