THE PROBLEM …
Did you know about and fully understand compound interest at age 16? Or the difference between an ISA and a Regular Savings Account?
I’d wager probably not.
Even if you did, you probably didn’t learn it at school.
The United Kingdom and most other developed countries across the world urgently need compulsory personal finance education at primary and secondary levels. Right now students leave the family unit to enter further or university education – or the even more daunting world of work – with only the vaguest hint of how to manage their money, wages, taxes and bills.
The little that is taught is about the math and not about the personal responsibility, the benefits of being financially astute and the dangers of not. It does not present the knowledge in a fun and ‘wow’ style; it’s just all about the numbers in the maths lesson.
It doesn’t explain what happens when you enter into a contract, or the dangers of high APR’s for having the latest MacBook Pro on credit rather than saving up for it. It doesn’t care about what happens when you over-extend yourself and end up spending more than you earn.
THAT URGENTLY NEEDS TO CHANGE
Rob from The Self Employed Investor and I want children to learn the value of compound interest in a “hey, that’s cool!” way, and not just as a series of numbers in a workbook.
We want to show the dangers of mis-managed debt and debt in general. We want to be able to teach how personal budgeting can keep everything together and how astute financial planning can take care of them when things go wrong.
Martin at Money Saving Expert tried very hard last year to get this through UK Parliament but was met difficulties at almost every step. He didn’t get to make the changes we all so commonly want and the country so desperately needs.
Did Martin struggle because the economic model requires endless growth and requires a certain percentage of people to be in debt to function. To spend more than they earn. To live paycheck to paycheck, and on credit. To fuel the credit industry; the debt recovery industry; and the banking sector.
The petition he created (now closed) on the government website reached 118,848 signatures and elicited the following response:
“Schools already use Personal, Social, Health and Economic (PSHE) education as a framework within which to teach young people about personal financial management. The existing PSHE programmes of study include elements aimed at ensuring that by the time they leave school, pupils should be able to manage their money, understand and explain financial risk and reward, and identify how finance will play an important part in their lives and in achieving their aspirations. We are currently carrying out a review to determine how best to support schools to improve the quality of all PSHE teaching.”
This response does not go far enough. At best they have committed to ‘carrying out a review’. What the system requires is a commitment to fundamentally change the current system and introduce specific personal finance modules at both levels of primary and secondary education. Children should know how to manage their money, but it is obvious they do not.
Leaving the beginnings of personal finance to later stages of secondary schooling is too late.
As I wrote in this week’s Monday Madness, Canada along with Marvel and Visa are putting together lesson plans using superheroes. While this may well appeal and capture initial interest among primary level children (5-10 yrs, for overseas readers), even just including basic details of compound interest at this level could spark a life-time of money-management ability:
If you can show a 10 year old how they can turn £20 a month into £56,124 by the time they’re 65 by only having to save and not spend £13,210 of their own money, I think that’d grab a lot of attention.
STUDENTS ALSO WANT THIS CHANGE
Just yesterday (Thursday May 3rd, 2012) the BBC reported students see the current math system as flawed and irrelevant. One student spoken to by the BBC said “Show me how I can use maths in business, to do accounts or banking”, and 63% of those surveyed by City and Guilds were worried about money.
Chris Jones of City & Guilds said: “We are not saying maths should be dumbed down, but it needs to be more relevant to the real world.”
HELP SPREAD THE WORD!
- Like this post on Facebook (see left!)
- Like/Share our Facebook Campaign
- Tweet this page and urge your friends to re-tweet (see left!)
- Blog about the campaign and share the issue with your readers
- Add our blog buttons (big | small) to your posts or sidebars and link
- Email your contacts in the blog/media world asking for campaign support
I have written to my MP, and the education secretary, and my local media. If you have the time to do so and agree with what Rob and I are saying, please consider doing the same.
We won’t get there without your support so please, please do all you can to raise awareness that the current education system is effectively failing our children when it comes to all matters personal finance.
With enough pressure and support, the United Kingdom and the rest of the world can have relevant, useful, real-world personal finance knowledge taught where it matters most.
Tags: Education, Personal Social and Health Education
Category Education Campaign
Trackback: trackback from your own site.