Publication date: 1 March 2016
In our world so full of financial uncertainty, one thing is clear: we cannot expect the coming generations to be financially literate if our educational institutions do not become more aware of its importance. Financial education has often been relegated to the background because it is viewed as something that children will learn naturally as they grow up. However, this is not necessarily the case. Some adults have problems understanding the basics and managing their money.
Mike Blamires, Executive Director at Research Initiatives for Participation and Progress in Learning Environments, edited in 2016 a MESH guide on Entrepreneurial Education. The weight of evidence suggests that financial education should no longer be just an extra-curricular activity, but instead be embedded in the curriculum across all educational levels and types. “Being financially literate would bring self-confidence, adaptability, risk-assessment, creativity, specific business skills and knowledge to children, who will sooner than expected turn into the adults running society,” he said. This insight is shared by Mr Wim Mijs, Chief Executive at European Banking Federation: “Financial education starts with the parents, but it also needs to be taken into the classroom. It is very inspiring to see teachers connecting with their children and make this progress happen.”
Children have always got by without financial education so why do they need it all of a sudden? According to the Personal Finance Education Group (2013), which works to provide knowledge, resources and support for anyone teaching children about money, 60% of UK adults believe that managing money is more difficult now than it was 10 years ago despite the spread of online tools. Only 12% find that it had become easier, and for this percentage to grow fast, we need people to see the many intrinsic benefits of financial education for their future, not just as an extra-curricular activity. As life becomes ever more complicated, we need to create better resources and take a broader approach to overcome illiteracy of all types.
The lack of importance granted to financial education is not the only problem. The treatment of financial education is far from systematic. Those teachers who do see the importance of including financial education in European curricula have independently drawn on a variety of resources, approaches, methods and tools to support their lessons. According to the review of evidence led by Mr. Blamires, “Individual teachers are seen as central key but the evidence shows that they also need external support. To give financial education real traction, we need to help teachers progress in the acquisition of financial skills and knowledge through partnership with business and the community.”
The International Network on Financial Education (INFE) in the OECD provides guidelines to promote the recognition of financial literacy. Among these, they stress how important it is for the education system and teachers to be actively involved in the development of a strategy aimed at the inclusion of financial education in schools. The learning framework for this discipline should set out goals, learning outcomes, specific content, teaching approaches, resources and evaluation plans. Equally, financial education should start as early as possible and should ideally be a core part of the school curriculum, although not necessarily as a stand-alone course. Integration into other subjects like mathematics, economics, social science or citizenship can also be effective. Lastly, teachers should be adequately trained and resourced and students’ progress should be assessed and their achievements recognised.
From the student’s perspective, the situation is equally unsettling: 82% of surveyed teachers by the Personal Finance Education Group in 2013 said children were motivated to learn more. This is hardly surprising as nearly half of 14-25 year olds could not tell the difference between being in credit and overdrawn on a bank statement. These conclusions match the findings of the first OECD Pisa financial literacy assessment: around one in seven students in the 13 OECD countries and economies who took part in the test were unable to make simple decisions about everyday spending, and only one in ten could solve complex financial tasks.
European Money Week, together with the national initiatives, was launched in 2015 to help fill in the gaps in the field of financial education. This year’s edition will continue to support the existing initiatives aimed at equipping children and teenagers with tools to gain confidence in financial environments early on their lives, while actively reminding teachers and educational institutions that students alone cannot make it without their support.