The UK has one of the most thriving and competitive finance industries in the world — a fact that is often overlooked by the public.
We know that the financial services industry is battling to improve levels of trust and engagement on the back of a series of scandals and public apathy. Yet, strong personal finance engagement should be the bedrock of a robust, thriving economy.
What we need is a coordinated approach to fair trading and financial education, as these two are inextricably linked: people want finance products that they understand, but a person’s understanding reflects their financial education. Even the Woodford saga would have been less damaging if all of his clients had understood the power of diversification.
In protecting the public from poor practice and market turmoil, financial education is like a seat belt. It won’t prevent crashes, but it can reduce the damage.
Financial literacy must improve and become the norm, not just the object of lip-service and political soundbites.
This process needs to start early. Throughout schools, colleges, and universities, students can be taught how best to make astute financial decisions during their lives and to learn about the power of saving wisely.
For instance, the head teacher of one school that has set up its own bank comments: “The children really enjoy saving and going to the bank at lunchtime to withdraw their acorns to spend in the shop. Many of our children now talk about the importance of saving money in order to buy items.”
And financial education shouldn’t finish there. University students can learn and benefit at the same time.
One university which shares this view adds: “We engaged with a provider of financial education last year to embed a positive financial mindset in students from day one, helping them manage their finances proactively throughout their university career and beyond.”
Everyone knows that financial education improves people’s lives. It improves confidence, self-esteem, and life chances. It reduces money worries and has a hugely positive impact on people’s mental health.
Today, we are more responsible than ever for our financial future, yet surveys are consistent: 40 per cent of people lose control of their finances at some point, and 20 per cent cannot read a bank statement correctly. Evidence suggests that children’s long-term attitudes to money are formed early in life, so the sooner we start teaching them good habits, the better.
Being able to save smart should not depend on whether your parents do — it should be accessible to everyone. Britain must encourage and promote basic financial education from nursery to retirement.
Here’s one idea. Children in nursery often make things out of cereal boxes, so why not make a money box? The children could then set a savings goal and earn credits throughout the rest of the year. That would be a great start.
Children’s financial knowledge then needs to build year on year, through school and university, before companies from every industry also get involved. Guidance in the workplace can go a long way to helping people use their financial knowledge practically. It will pay dividends to those employers that do, and should be a core component of any employee wellbeing package.
Of course, there is no quick fix. Making improvements immediately will be slow progress, but putting things right for future citizens is eminently possible.
We want the next generation of children to understand finance, like this generation understands technology. There’s no reason that this can’t be done, and with growing consumer choice, there is a pressing need for doing it.
Main image credit: Getty