I was invited to the Department for Children, Schools & Families today for a chat with the Secretary of State, Ed Balls MP. I must admit I smiled on the way in. For nearly ten years I’ve been whinging and ranting about the fact we desperately need financial education in schools. And now rather than it being scrapped, it’s happening, it’s compulsory and there I was discussing the hows and whats, not the ifs and whens.
Why it’s so important.
We’ve been a nation that educates our youth into debt when they go to university but never educates them about debt. The state-enforced borrowing by students has diminished the stigma of borrowing. Yet we never explained to people how debt works, how to borrow correctly, and how to choose who to do it with.
It’s therefore no surprise that with a debt illiterate nation we’re second in the world cup of borrowing after the US.
The truth is many students’ parents are themselves in the mire of borrowing and there’s a worry that these bad habits will be passed on. Financial education is crucial if we are going to break this cycle.
That’s why it’s joyous that it will be a compulsory part of PHSE from September 2011 with different age groups learning different things. (More in my BBC financial education appearance blog and Personal Finance Education to be compulsory MSE News) though of course there are still some substantial practical challenges like what’ll be taught and the need to teach the teachers.
It must be about training up savvy consumers not just a nuts and bolts approach
My concern is that the education will be very straight. The risk of that is it’ll leave children unenthused and it won’t equip them for our hugely competitive consumer economy. It needs a little pizzazz.
So content and delivery are the key. Many of the current education programmes out there focus on the practical way things work rather than understanding the hugely competitive consumer marketplace that we live in.
Let me give you a couple of examples
Traditional Approach: At the age of 6/7 you teach children about the different types of coins and how they work.
My View: At the age of 6/7 you take a child into the supermarket and explain in a very simple way that the reason there are sweeties by the till is because a company’s job is to make money. So it puts the sweeties there so you will ask mummy and daddy to buy them for you, and it can make a bit more money.
While the traditional view is very important it tends to focus on how to functionally deal with money, not about being a better consumer.Lots of the financial education material that has been out there for a long time has come from the banks and it can be very useful for the building blocks. Yet the last thing they want to do is teach people about market competition.
Schools let banks in to set up branded mini-branches. While this is great on the practical side it’s a nightmare for competition. The old stat is you’re more likely to get divorced than change bank accounts, so allowing banks in schools to sign kids up can be very profitable if the customer sticks there for the next 50 years.
Instead if you want banks in schools then there need to be 10 different ones. You also need to explain to the kids that banks are there to sell, not to help, and give them an arsenal of information to help choose the best one. Then remind them not to think of it as a done deal: keep watching the terms and if it gets worse, ditch and switch (more on how to teach kids this in the Teen Cash Class guide).
The good news is the Minister was very receptive to this. In fact I’d go as far as to say he seemed totally on board; I think this is a big personal issue for him too. Then again of course, before the Education brief he was at the Treasury, and finance is his bread and butter.
None of this is about wanting to step on others’ toes. The likes of PFEG do a fantastic job and are working full speed on the curriculum; yet the big financial institutions are playing a role in steering the education agenda and it’s important other perspectives are given too.
Having done the ‘what we want’ it was then ‘what they want’
I’d already explained before being invited in that this is a passion of mine, so when the Minister asked whether I would be willing to help my answer was quite simply yes; anything to push and help make financial education work and be effective.
The Teen Cash Class is already something where I’ve waived copyright for educational use, and we’ve now agreed to look at working on some of the themes in the teen cash class and see how these could be incorporated into the work that PFEG and others are doing, and look at using some media outlets to push the message out too.
I’ve also agreed to do some talks at conferences to teachers, and even to film a video to enthuse them about the new course. After all, this is all good on paper but unless teachers are given the time, help and passion for the subject the whole thing will fall down.
And I hope that’s just the start – in many ways I think this type of education is the biggest change in our attitudes to finance for years.