Financial education isn’t a compulsory requirement in UK schools, even though research points towards the positive impact that this would have on children and their futures. With that in mind we look at why financial literacy isn’t taught in schools.
Related: Financial literacy for kids
Are there any schools in the UK that teach financial literacy?
Under the national curriculum, state secondary schools in the UK teach financial literacy within maths and Personal, Social, Health, and Economic (PSHE) education. However, PHSE is not a mandatory subject, meaning there is no set programme of learning objectives around financial education. If schools do teach kids about money, they have to fit in financial lessons alongside a range of other PHSE topics, including bullying, mental health and digital literacy. What’s more, the national curriculum only applies to schools maintained by local authorities. Academies and free schools (making up 35% of schools in England) have the freedom to shape their own curriculum, so may not even teach PHSE or financial literacy.
Why don’t schools teach financial literacy?
Lack of curriculum time
Whether you have a child in primary or secondary school, you will know how crowded the school curriculum is and how teachers are under increasing pressure to fit in all the content at each key stage. So, while teaching financial education at school has real advantages it is only covered under the economic education component of PSHE and numeracy in maths. This means the depth of content covered varies depending on the lesson time available.
Absence of teacher training
The ad-hoc nature of PHSE in schools alongside struggling school budgets means many teachers have yet to gain specific training in the topics that fall under PHSE. Plus, as there is no standardised approach to teaching financial literacy, the quality of lessons varies depending on the school and the teacher. It's why there have been calls for financial education to be given more priority and prominence within the national curriculum and to make it compulsory in primary schools to help prepare kids for the realities of managing money in the wider world.
Low priority
Non-core subjects and subjects that don't have standardised learning objectives are not prioritised in schools. And while the PSHE Association advises that students should have one hour of specific, timetabled PSHE per week, this still only equals 39 hours in a whole school year. And that's 39 hours to cover everything that falls under PHSE, not just financial education.
Lack of resources
As PHSE often falls to form teachers, many need more skills, confidence and resources to teach financial literacy. This means the quality of financial education in schools tends to be inconsistent.
Perception of responsibility
With only 4 in 10 children and young people saying they've had some financial education at school and 87% of 11-18-year-olds in the UK saying they have limited knowledge about managing money, we should all take some responsibility for teaching financial literacy. Financial Capability believes that, as with other areas of learning, school-based financial education is successful when parents are engaged, and learning happens in the home too.
Related: Teaching the basics of financial responsibility to kids
The advantages of teaching financial literacy in schools
Financial literacy is widely recognised as being a key determinant of lifelong financial outcomes and an essential 'life skill'. Recent economic research 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.
As we all know, managing money well demands a sophisticated set of skills ranging from basic mathematical skills to budgeting, an understanding of how savings work and how to avoid getting into debt. It's why research from CBI Economics analysis commissioned by GoHenry and Wilson Wright underlines that financial literacy not only raises early-career earnings prospects by up to 28% but that more than half (51%) of those who received financial education as a child have up to £5,000 cash savings in an ISA or savings account compared to almost a third (30%) of those who didn't.
Stephen Lucas, Economist at Development Economics, says: "The opportunity to receive financial education clearly has powerful benefits for children later on in life. To me, the most important impact on the economy is the link between financial education and future attitudes towards starting a business. Around half of all job creation in the UK is driven by start-up and early growth stage businesses, so anything that has the potential to boost start-up rates has the potential to generate powerful effects on future levels of employment and wealth creation."
Louise Hill, COO and co-founder of GoHenry, agrees, "These findings clearly demonstrate the positive impact that financial education has on individuals, businesses and the wider UK economy. It is vital that we teach these essential life skills much earlier to bridge the financial capability gap that is costing the UK billions every year."
What's more, a financial education is something kids and teens want. According to a 2021 survey by the London Institute of Banking and Finance, almost three-quarters of 15 to 18-year-olds wanted to learn more about managing their money in class. But only 15 percent of the 2,000 students surveyed said the school was their primary source of financial education.
What would financial education in schools look like?
Our evidence shows that children's attitudes about money are well developed by the age of seven. So, learning about the world of money needs to start as early as possible in primary school. Children also need to be able to put their learning into practice and participate in the digital economy. This means providing pupils with a combination of lessons and experiential learning so that they are provided with the knowledge and skills they need to make informed decisions about their personal finances. Key elements that should be included in financial education lessons are:
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Basic money management skills including budgeting, saving, and banking.
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Different types of debt, such as credit cards and loans, and how to manage debt responsibly.
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The different types of investments and how to make informed investment decisions.
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Understanding financial products such as savings accounts, mortgages, and insurance, and how to choose the right product for their needs.
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The basics of taxation, including income tax, National Insurance, and how to file tax returns.
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Understanding pensions and the importance of planning for retirement.
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Ethical and sustainable finance, including how to make responsible financial decisions that align with personal values and contribute to a sustainable future.
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Emotional regulation around money so you can delay gratification and differentiate between needs versus wants.
In an ideal world all of the above elements would be supported and promoted by parents and the private sector to help children gain real-world experience. As our CBI Economics analysis found, adopting such a collaborative approach is crucial if financial education in schools is going to be a success.
How GoHenry can help improve your child’s financial literacy
GoHenry is a pre-paid kids' debit card and teen debit card designed to help kids and teens learn about financial literacy in a hands-on way. By paying pocket money on their card, the app allows kids to spend safely, budget, and save in a financially responsible way. Money Missions, in the GoHenry app, also provide a range of financial education resources, including bite-sized articles and quizzes, to help your child learn more about money management.
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