COVID-19’s economic fallout has revealed the precarious nature of the UK’s personal finances: pre-pandemic a third of Britons had less than £600 saved for emergencies. One in ten hadn’t any savings whatsoever (creditfix.co.uk). As a nation we were ill-prepared to withstand a downturn, let alone a pandemic.
This begins with education: among adults, the UK ranks below the OECD average for financial literacy (OECD/INFE 2016 Survey of Adult Financial Literacy). Within schools, despite financial literacy joining the national curriculum in 2014, teaching is patchy – just 18% of polled school students reported receiving any financial education within the last month (London Institute of Banking and Finance (LIBF), 2019). On top of that, BAME communities, immigrants, and women are all more likely to fall below average levels of basic financial understanding (Lusardi, A., Hasler, A. & Yakoboski, P.J. Mind Society Journal, 2020).
This lack of widespread financial education is therefore an issue and an opportunity.
There is clear demand: 87% of polled school students want to know about specific financial products such as credit cards and mortgages, and 77% would like to know how to budget effectively. In total, 60% of students would prefer to learn about money as a separate subject (LIBF). However, financial education is only currently included as part of citizenship lessons within Local Authority schools. Academy and independent schools are not obligated to teach it at all. The all-party parliamentary group on financial education found that only 17% of secondary schoolteachers had received training about how to teach it.
Financial literacy is a shield against shocks. If we are to enter a new ‘Roaring Twenties’, as many have predicted, we must be mindful of how the last Twenties ended. To learn the lessons of the pandemic, the work to educate and prepare the next generation begins today.