New Classes to Teach Kids About Money Management
Over the next couple of months, young people in secondary schools will start learning about financial management as part of the national curriculum, in a bid to teach them how to work towards a financially secure future.
The changes to the curriculum come after a campaign led by Martin Lewis, the financial advisor behind moneysavingexpert.com. Over 14 million people use the website on a monthly basis, and since being founded in 2003 has saved customers an estimated £10 billion.
“The better you are with your cash, the better your life can be,” Mr Lewis explained. “People think I’m telling them to stop spending money, but I’m simply telling them to spend it wisely.”
He added that without proper financial education, people have become too reliant on credit cards and other means of borrowing money, most of which have high-interest rates. This can lead to a spiral of debt that gets out of control and leave families in dire situations. Because of this, Mr Lewis started campaigning to get financial education into schools.
Now, schoolchildren will be getting lessons in mortgages, pensions, saving and budgeting, as well as being taught how to spot a cost-effective deal. These lessons will be incorporated into existing maths or citizenship classes.
On top of this, schools in areas where improvements to financial literacy are most urgently required will be targeted for a specialised programme. This programme is being backed by Pfeg (the Personal Finance Education Group), which will give training to teachers and help create lesson plans, and Experian, providing funding and volunteers to help support the teachers.
The lessons have been welcomed by headteachers across the country, including Andy Shakos, head at Manchester’s Parrs Wood High School. He said that financial education like this would once have only been useful for when a person leaves education, gets a job and settles down, but that students are thinking about money management a lot sooner nowadays – because they have to.
“Now our students see it as, ‘Well, in two years I’ll be going to university. I need to be able to have a hold on and understand my accounts as soon as possible because if I don’t, I am going to come out with a very big debt’,” Mr Shakos explained.
But the classroom isn’t the only place where children will have the opportunity to learn about how to handle their finances. More and more internet bank accounts are emerging that are specifically designed to teach saving and budgeting to children.
Some of these accounts act as an online piggy bank, allowing parents to deposit the children’s pocket money into the account. And when the child has saved enough money for something they want to buy, they can mark that item on their account and the parents can then purchase that item online. Alternatively, if the item the child wants to buy is in a shop, the cost of it can be deducted from their account once it has been paid for in cash.
Other accounts offer cards for the children to use like an adult’s credit or debit card, allowing the child to use it to buy items in shops or online. The parents are able to set spending limits on the card, have the card instantly blocked if it is stolen, and decide on the extent of freedom for use of the card, such as whether it can be used online, in shops or at cash points.
There are many benefits to these online accounts, such as a child being able to create saving goals, and also monitor their spending using a smartphone or tablet.
“It is important that young people become familiar with how to manage their money, how to manage a bank account,” declared Schools Minister Nick Gibb, “[and] the consequences of being in debt, how to manage debt, how to manage their savings, how to understand things like pensions and ISAs.”
Children are being given more pocket money than ever before, and the lessons will enable them to learn how to spend their money wisely. This will lead them away from the borrowing culture that seems so prevalent at the moment, and it won’t be long before our children will be offering us sound financial advice.