Most people in the UK can read and write but when it comes to financial literacy, it’s a more worrying scene. The OECD currently places the UK 15th out of 30 countries for personal financial knowledge and a study from FinCap shows that 39% of UK adults don’t feel confident managing their money.
Those are shocking figures by themselves, but thinking about them in the context of the economic fallout from the pandemic shows the pressing need to prioritise financial education from a young age. This is key to building the UK’s financial resilience.
The case for early financial education
Money management is a key life skill that needs to be learned through a combination of education and real-world experience. Research from Cambridge University shows that children form their attitudes and habits towards money by age seven, signalling a need for early intervention. But herein lies a problem.
While conversations around financial education are starting to accelerate, and indeed campaigns like the FT’s Financial Literacy and Inclusion Campaign are helping to further this cause, its implementation in UK schools remains inconsistent.
A study from the Money Advice Service revealed that teachers lack the time and resources to regularly teach pupils about money. Additional research from the Just Finance Foundation shows that just 5% of parents think that their children leave school with the skills needed to manage money well. Add to this the absence of a clear and consistent curriculum, especially at primary age, and we start to see real cause for concern.
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Helping parents build children’s financial confidence
We know parents want to raise money-savvy kids and recognise financial literacy as a core life skill. So for many, it’s not a question of whether it’s important to teach children about money management, but rather how to do it.
Of the parents that we speak to, 95% have said they would value more support from schools and the government when it comes to delivering quality financial education. Getting standardised financial education in schools is a long-term ambition, but steps can be taken right now to address the financial literacy gap and this is where fintech can help.
The pace of innovation across fintech and e-learning has continued to gather speed. New platforms and apps have been designed, developed, and launched to support ‘learning from home’, with the edtech sector alone recording investments worth $1.1 billion in 2020.
Adding to this, GoHenry has accelerated its ambition to play a part in financial literacy with the launch of “Money Missions”, a gamified in-app experience offering bite-size financial lessons in line with UK national guidelines. Kids complete fun and interactive missions with engaging animated videos, quizzes, and rewards, all while gaining experience such as responsible spending, saving for the future, delayed gratification and learning to budget.
With an ever-increasing number of financial options such as ‘buy now, pay later’ schemes, digital currency in online games and meme stocks available at every touchpoint, it’s the development and practice of real-world financial skills that will help Gen Z and Gen Alpha – the UK’s first cashless natives – to build the resilience needed before they turn 18 and start to engage in the adult world of finance.
Written by Richard Jones, Chief Product Officer at GoHenry, a pre-paid card and app with unique parental controls, for young people aged 6 to 18.