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Being financially capable is now more important than ever. The classroom is vital for personal finance education, says the Financial Services Authority
 Being financially capable means being able to manage money, keep track of finances, plan ahead, make informed decisions about financial products, and to stay up to date about financial matters. In the current economic climate, being financially capable is more important than ever. It is crucial that everyone understands their rights and responsibilities, where to go for help if they need it, and that they are wary of any offers that look ‘too good to be true’.
Financial capability is embedded in the government’s Every Child Matters outcomes, with the expectation that all young people ‘achieve economic wellbeing’. It is a key part of the secondary curriculum in schools through the ‘economic wellbeing and financial capability’ programme of study, and through the PSHE element that becomes statutory in September 2011. And it has a place in topics such as Mathematics, Citizenship, Business and Enterprise education. Being financially capable increases motivation, confidence and self-esteem, empowering young people to make informed choices and to become active citizens who can go on to make a positive contribution to society.
Personal finance education
Starting this process in school is vital. Schools provide a unique opportunity to reach all sections of society when we are at our most receptive to learn, and can develop positive attitudes to money early. Young people will then grow up in a culture of asking informed questions about money, and developing positive attitudes to money. The case for personal finance education in the classroom is overwhelming. The National Strategy for Financial Capability is led and funded by the FSA to help people in the UK manage their money and feel more confident with money matters. It provides money guidance that reflect key life stages – at school, in further and higher education, for young people when not in education, employment or training, in the workplace, and when starting a family.
The programme provides completely free and impartial resources and support to equip people with the skills and knowledge they need, through working in partnership with those organisations that already have a relationship with them.
For our schools project, we have linked with educational organisations across the UK to provide support to schools to enable them to provide a high standard of financial education that meets the needs of their learners. The projects aim to improve teachers’ confidence in the subject and help them bring it alive in the classroom: In England, we have funded the education charity pfeg (Personal Finance Education Group) to deliver support to teachers via ‘Learning Money Matters’ in 3,500 secondary schools (pfeg has since been asked to take forward the My Money financial education programme in England funded by the DCSF); and we are funding posts at the Welsh Financial Education Unit, Scottish Centre for Financial Education, and the Northern Ireland Council for the Curriculum, Examinations and Assessment.
Other resources
It doesn’t, however, stop there. Our programme offers teaching and school staff the chance to increase their own financial capability through our ‘Making the Most of Your Money’ seminars and information delivered direct to people in their place of work. This is completely free of charge, and delivered by trained, impartial presenters. The programme provides an important personal development opportunity to learn tips that will be useful on a day-to-day basis, as well as adding to Continuing Professional Development in delivering personal finance in the classroom.
Our ‘Moneymadeclear’ website, online tools and guides provide clear and impartial financial information for everyone to access whenever they need it. And our ‘What About Money?’ website contains a host of information for young people aged 16 to 24, helping them understand different financial products, basic budgeting tips, and where to go for help if they need it. ‘Parent’s Guide to Money’ is our practical resource to help expectant and new parents covering the financial aspects of a new baby.
It is important to provide a comprehensive approach through education, and our ‘Money for LiFE’ project helps student services and curriculum staff in Further Education colleges plan activities to enhance the financial capability of their learners, and also provides a resource ‘Money for LiFE’ of teaching materials to help them do this. On into higher education, our Money Doctors programme helps student money advisers help students to avoid money troubles and what to do when things don’t go to plan.
For practitioners working with young people who are not in education, employment or training, our ‘Young People and Money’ training programme helps them support young people with money matters. And we are working with key organisations and government to encourage the embedding of financial capability into their policies and programmes.
Social benefits
The Every Child Matters approach may be aimed at the younger generation, but its element of ‘economic wellbeing’ is something we can all benefit from. Economic wellbeing is about making the most of the money you do have: Being financially capable can mean the stark difference between getting by and not being able to afford the basics. For young people in poorer households learning to be financially capable as early as possible can help them avoid a cycle of deprivation. And it is never too late to learn. Being financially capable has wide social benefits. Research the FSA conducted earlier this year found that an improvement in an individual’s financial capability leads to an improvement in their psychological wellbeing. Even moving from low to average levels of financial capability decreases anxiety and depression by 15 per cent. It increases life satisfaction 12 times more than earning an extra £1,000 a year.
In 2008 the government asked the FSA to plan and pilot a national money guidance service for everyone in the UK. During 2009 we have delivered the resulting Moneymadeclear service in the North East and North West of England, helping people with their money issues via telephone, online and face-to-face, with a view to rolling this out across the UK.
So our National Strategy reaches people with a combination of learning, enabling young people to develop positive attitudes towards money early in life, supplemented later by effective information and guidance.
But for the generations to come the key will lie in beginning financial education at school, growing up with personal finance in their day-to-day lives, so that they are better placed to avoid making money mistakes later in life.
The FSA (Financial Services Authority) is the independent regulator for the UK’s financial services industry.
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