How businesses can help children become financially-savvy
Some 5.3m children across the UK aren’t taught basic money skills. One company, EVERFI EdComs, is helping businesses change that.
“Tap here, tap there. How are we meant to ever teach kids the value of money when we’re looking at a bit of rectangular plastic in our wallet or purse?”
Gareth Devlin, a parent of primary-aged children, sums up how difficult it now is to help young children understand how to manage money when we so rarely see cash exchange hands.
Experts say the divide is becoming more pronounced between those children who are given a basic grasp of how to handle their future finances and those that aren’t.
Some, like Zara*, aged seven, already have some understanding of what it means to invest in the stock market. Thanks to conversations with her parents, Zara can explain to her classmates that while some companies go bust, others can still thrive.
Meanwhile, at least 5.3m other children in the UK receive very little - if any - guidance on how to manage their future earnings, according to The Money and Pensions Service, an arm’s length body of the Department for Work and Pensions.
And it shows, says Simon*, an assistant headteacher in an inner-city secondary school.
“I don’t feel there is any sort of understanding about the value of money - it’s just so evident when you walk around the school,” he says. “Children are just throwing money down. They think their parents are going to be around forever to bail them out.”
It’s no wonder that the Organisation for Economic Co-operation and Development places the UK well down in the rankings of G20 countries as far as financial education is concerned.
Professor Andrew Lymer, Director of the Centre on Household Assets and Savings Management at the University of Birmingham, says there has always been a divide between children who are taught how to handle their future finances and those who aren’t, but that it is now “more accentuated because our financial lives have become more complicated”.
More information, he says, is now at our - and our children’s - disposal, making the options available on how to manage our money potentially overwhelming. “It is the children who have suitable guidance to use this information who tend to end up understanding it better,” Prof Lymer says.
The divide between financially-savvy children and those left in the dark can also be attributed to what MPs described four years ago as a “postcode lottery” when it comes to classroom lessons about money management.
The All-Party Parliamentary Group on Financial Education for Young People found that, even though financial education is part of the secondary curriculum, some pupils are not being taught the subject because their school does not consider it important enough.
No matter what the reasons are behind the divide, experts agree it is particularly worrying in the current economic climate.
Sharon Davies, the CEO of UK charity Young Enterprise, says the pandemic has exacerbated an “already increasingly complex financial world”. Those who graduated in the aftermath of the last financial crisis suffered particularly sluggish wage growth and more were in low-paying jobs. There’s everything to suggest it will be the same for this recession.
And it’s certainly not just teachers, policy-makers and politicians who can help bridge the divide between children who are taught how to handle their finances and those who aren’t.
Vault is for nine to 11-year-olds across the UK and has been accredited with the prestigious Financial Education Quality Mark. It has been adapted for the UK market after reaching more than 340,000 students from across the US. It teaches basic financial concepts, such as budgeting, income, credit and future planning, and can be taken at home or in the classroom.
Part of the course’s success comes from the way it uses real-life scenarios and interactive games to show pupils how to make smart financial decisions.
Businesses sponsor the courses so that Vault can be provided free to UK schools.
Ray Martinez, President and Co-founder of EVERFI, EVERFI EdComs’s parent company, says one of the best ways businesses can respond to social inequality is to sponsor a course like Vault.
“Our financial institutions, and so many others, play a key role in developing financial confidence in young people,” Martinez says. “Not only does sponsoring a course like this help provide a long-term solution to one of the thorniest challenges in our society, but it ultimately makes for more knowledgeable financial consumers as well.”
Kristien Turner, Head of Digital Financial Literacy at HSBC, says businesses increasingly see financial literacy as a “core component” of their wellbeing strategy as it empowers employees to make informed financial decisions.
There will be long-term repercussions if we allow the divide between those children who are financially-savvy and those who aren’t to persist, Professor Lymer says.
“It’s critical that financial education starts young,” he says. “Left too late, or not given at all, the consequences can affect young people for the rest of their lives.”
*Names have been changed.