Financial Education is a term that not many people are overly familiar with, but a good financial education is the basis for vital life skills that help us become self-sufficient and confidently take steps towards our hopes and dreams. To stay up to date with the latest employee wellbeing solutions, follow us on Facebook, Twitter and LinkedIn.
Despite the vital life skills that a well-rounded financial education can teach us, there’s a concerning trend that reveals a severe lack in financial literacy across the nation. New research released in 2020 by Finextra reports that an overwhelming 93% of the nation feel undereducated when it comes to their personal finances.
This confirms that in our society there’s a clear lack of confidence when it comes to money matters. In fact, 47% of the nation believe it is their bank’s duty to help them make better financial decisions, even though almost a quarter (24%) of people admit they feel they have been misled by their bank’s financial advice.
How did we get here?
The truth of the matter is that if we felt confident enough to manage our own money, we wouldn’t be turning to mistrusted institutions for financial guidance. Unfortunately, it comes down to the fact that financial education is glaringly absent from our school curriculum.
While we are taught mathematics from a young age – we are rigorously tested on fractions, equations, and the ability to calculate angles in a triangle – there’s a severe lack of education in important financial life skills. In fact, a 2019 survey published by the Financial Times reported that 80% of UK students aged 15-18 do not feel they are not taught enough practical money lessons in schools.
Unsurprisingly, this lack of education in financial life skills means that when it comes to developing knowledge about personal money management and how we can use budgets to reach our long-term goals, we are ultimately left to learn from our own experiences and failures. This is evident in young adults as many are still developing the skills they need to manage their income and plan ahead, and with little to no guidance, are forced to learn the hard way once they enter the working world.
The Financial Capability Strategy reports that although younger generations are more likely to have dreams and goals than other age groups, as many as two thirds do not have plans in place to achieve these goals. Any planning that is in place tends to focus on short-term spending, revealing the struggle to balance long-term financial goals with immediate spending needs.
What can you do?
While it’s better to begin to learn these vital life skills at a young age, it’s never too late to take matters into your own hands and go back to basics with your financial education.
The extra free time we’ve found ourselves with as the result of the global pandemic may have got you thinking about how you regularly use money in your day-to-day life. As Becky O’Connor, personal finance specialist at Royal London observes: “During lockdown, people may be paying closer attention to family budgets and avoiding unnecessary spending”. Seeing the rewards of reaching those short-term goals is a great way to take your financial education back to basics and create healthier habits going forward. In fact, we’ve put together a few tips for lockdown to kick start your journey towards money mindfulness that you can check out here.
A promising future
However, the future of financial education is looking brighter. The uncertain state of the economy, paired with an increased demand for financial literacy, may give this conversation the kick start it needs. Currently, financial literacy lessons are not obligatory and are usually featured inconsistently as part of other subjects, yet the London Institute of Banking and Finance found that the demand for a more comprehensive education is undeniable – 82% of students want to learn more about personal money management in school. As well as this, there are increased calls for financial literacy to become a priority on the school curriculum, with the LIBF campaigning for financial education to be taught as a separate subject with regular time in the classroom.
This demand for an unbiased financial education isn’t simply limited to schools. As money worries seem to become an increasing area of concern across the nation, employers may be motivated to reconsider their attitude towards their employees financial wellbeing. Financial education platforms within the workplace are a great way to provide unbiased guidance to employees, as well as being a great learning tool for the majority of adults across the nation who are feeling the effects of financial illiteracy after missing out on a comprehensive financial education.