Louise Hill, COO and Co-Founder at GoHenry, explores…
The past year has been extremely difficult for many families who are still dealing with the aftermath of several lockdowns. Now, with constant talk of the rising cost of living and an energy crisis, consumer confidence is as low as it was during the height of the pandemic last year.
The energy price hikes aren’t something any of us could have feasibly planned for. On top of a turbulent two years we’re in a situation where, now more than ever, access to financial education is essential to equip the next generation with the tools needed to navigate periods of hardship.
Prioritising financial education will grow the UK economy
Financial literacy is widely recognised as a key determinant of lifelong financial outcomes and an essential ‘life skill’.
Recent economic modelling carried out by GoHenry revealed that the UK economy would be £200 billion richer by 2050 if children received financial education from an early age. It also showed those who didn’t receive financial education as a child are more likely to be unemployed, or earning less today, than those who did.
Despite progress being made to improve financial education within UK schools, education has born the brunt of the government’s budget for consecutive years, with a 9% fall in funding since 2009. This has put pressure on parents and businesses to play a greater role in teaching younger generations about the skills needed to effectively manage their money.
We know from speaking to our own customers just how critical this is. We have parents who have fallen behind on energy bills or got into debt when they were younger and want to ensure their own children don’t face the same challenges they have. We owe it to these parents – and their children – to prioritise financial education for young people now.
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Creating a national strategy for financial literacy
With significant investment needed to support the UK’s ‘levelling up’ agenda, a collaborative strategy is essential to improve the nation’s financial literacy.
Managing money effectively demands a sophisticated set of skills ranging from basic mathematical skills to budgeting, an understanding of how interest works or emotional regulation to avoid splurging. Recent CBI Economics analysis commissioned by GoHenry and Wilson Wright underlines that financial literacy raises early-career earnings prospects by up to 28% and that students with high financial literacy are more likely to start a business.
A comprehensive and consistent curriculum with input from across England, Scotland, Wales, and Northern Ireland from primary school level will ensure children receive a uniform financial education that feeds into their attitudes towards money during their formative years. This is essential as money habits are formed as early as age seven.
Additionally, our CBI Economics-commissioned analysis found that adopting a collaborative approach with the private sector to improve and promote financial literacy – in particular, for young people – is crucial if financial education is going to be a success. Work has already begun in this area with charities such as The Centre for Financial Capability pushing for high-quality and effective financial education from primary school age.
We need the support of government, businesses, parents and schools to make this work
Financial literacy provides the opportunity for more young people to have a bright and prosperous future. It also brings a range of individual, societal and workplace benefits – we just need to empower young people (and those teaching them) with the right tools and knowledge.
To achieve this, greater collaboration between the public and private sector is vital. We want more businesses and organisations to share their time, resources, and knowledge to help support parents and teachers to improve the financial literacy – and future prospects – of the next generation.
Together, we can help bridge the financial capability gap that is costing the UK billions every year; it’s not a race we can win alone.