Teach all children personal finance say MPs

After an eight-month inquiry, the All-Party Parliamentary Group on Financial Education for Young People is calling on Ministers to ensure school-leavers are better equipped to avoid running into money problems.

In its report it demands that personal finance education be made compulsory in schools.

Financial numeracy should be taught within mathematics and “subjective aspects” as part of Personal, Social Health and Economic (PSHE) education, it says.

The group recommends the appointment of a co-ordinator or “Champion” within each school responsible for bringing personal finance education together, after research revealed teaching of the subject was currently ad hoc, with only 45 per cent of teachers responding to a survey by the inquiry saying they had ever taught it.

The report comes ahead of a Commons debate about the issue on Thursday, secured after more than 100,000 people signed a petition by money expert Martin Lewis calling for financial education to be made compulsory.

Following his success on the petition, Mr Lewis said the country’s ignorance of financial issues had contributed to both mis-selling in financial services and the recession.

‘We’re a financially illiterate nation, with millions caught by mis-selling, overborrowing and being ripped off,’ he added.

“Companies spend billions on marketing and teaching their staff to sell – it’s time we got buyers’ training. The most cost-effective way to start is to ensure every child in the country gets a basic understanding of personal finance and consumer rights before leaving school.”

Tory MP Andrew Percy, who chaired the inquiry, said: “Credit cards, mortgages, hire purchase agreements, mobile phone contracts, tuition fees and even supermarket offers all require us to apply functional maths skills, such as being able to calculate APR, compound interest and percentages, to real-life situations.

“But too many of our school leavers, who can perform complex mathematical equations and algebra, have no idea what basic financial terms like APR and PPI mean – leaving them without the necessary level of financial literacy to make decisions in an increasingly complex financial world.”

He added that financial education would be a long-term solution to irresponsible borrowing and personal insolvency.

“Furthermore, teaching people about budgeting and personal finance will help equip the workforce with the necessary skills to succeed in business and drive forward economic growth,” he said.

Wendy van den Hende, chief executive of the Personal Finance Education Group (PFEG), said: “Young people want to learn how to manage their money, and school is an excellent place for this to happen.

“Teachers clearly want it to be part of the curriculum, so that it is taken seriously and has the support it deserves to be taught effectively.”

Mr Lewis, who is behind the MoneySavingExpert.com website, said: “We need compulsory financial education in our schools.

“Our nation is financially illiterate. For over 20 years we’ve educated our youth into debt when they go to university, but never about debt.

“Breaking this cycle will mean less mis-selling, fewer bad debts, better consumers and could save the public coffers a fortune.”

Schools Minister Nick Gibb said: “Our education system should help provide young people with the information they need to make sensible decisions about important aspects of their lives – from relationships to managing their finances. The best schools already do this.

“Sadly, Ofsted says that this doesn’t always happen – leaving many young people lacking the information and skills they need to become healthy and responsible adults.

“This is why we are reviewing PSHE education, which includes finance education. This report is a welcome addition to the debate on how schools can help young people to become more money-savvy.”