Better financial education will prevent more university students dropping out - Sharon Davies

Sadly, the year ahead looks equally tough for students too. Inflation remains high for the foreseeable future. Household and personal costs continue to rise, and economists forecast we face the worst and most prolonged recession out of any nation in the G7. Many more students face significant financial challenges in 2023.

For many people, attending university is one of the highlights of their life. To guarantee students have the best university experience going forward, we need to educate and raise awareness of the importance of financial education.

It is essential that we warn the next generation about potential economic pitfalls and equip them with the necessary skills to be financially confident. Armed with suitable financial education, children and young adults can be better prepared to manage their finances. Without this knowledge, the next generation are at greater risk of online scams, bad credit scores and a lack of savings.

Currently, there are vast gaps in the financial capability of this country. The Financial Capability Survey shows that 39 per cent of adults, 20.3 million, don’t feel confident managing their money. A further 11.5 million have less than £100 in savings, and nearly nine million Brits are in serious debt.

With students receiving loans from the government to help them through their studies, we must make sure they are confident in using that money wisely. Financial education doesn’t just encourage and support people to live within their economic means; it also empowers individuals to get into the routine of healthy financial habits such as saving and investing smartly.

Over recent years, the world has changed significantly, meaning young people are encountering fresh challenges which did not exist for previous generations.

With the pandemic proving the catalyst for a cashless society and many restaurants and retail outlets now preferring contactless payments, physical money is increasingly becoming redundant. This has led to a rise in new financial challenges and scams.

For example, following the e-commerce boom in recent years, there has been a notable surge in the emergence of Buy Now Pay Later schemes. While these may seem attractive to consumers due to their quick credit approvals and little interest, we often see young people get caught up in dangerous debt cycles leading to overspending and missed payments – culminating in creating a poor credit history.

The rising cost of living has also caused young people to make risky investments in highly volatile stocks or cryptocurrencies with the hope of quick wins, often trusting their favourite social media influencers’ advice, which isn’t always accurate. With the threat of online scams growing, it is important that young people have the knowledge and confidence to make informed decisions, decreasing the likelihood that they fall victim to a scam. With a report from UCL stating that the financial skills of 15-year-olds from socio-economically disadvantaged backgrounds are similar to 11-year-olds from more advantaged backgrounds, it is essential that, as a society, we work together to make sure this gap is eradicated.

Financial education can make a significant contribution to financial freedom. Through our programmes, we aim to increase access to the skillset tools for young people to successfully navigate an increasingly complex and challenging modern world.

Parents, educators, and businesses all play a role in encouraging young people to be financially capable. Worryingly, the subject is not on the statutory curriculum in English primary schools and while it has been for secondary schools since 2014, its essential we get children engaging with financial skills from a young age. This is especially important following research from Cambridge University that has found that children’s mindset around money habits are set by the age seven.

However, it is not all doom and gloom. In recent school visits to Leeds and surrounding areas of Yorkshire, I have been hugely impressed by the commitment and dedication schools in the area have shown towards financial education. There is a lot of fantastic work going on.

It is imperative that we continue to build on this momentum and ensure that any conversations about money and finances are engaging, relatable and practical, particularly amongst young children. In doing so, we can help young people make stronger links between what they learn and how it impacts them in the future.

Sharon Davies is the CEO of education charity Young Enterprise.