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Posted - 29 May 2007 : 10:21:24
Pupils go to the top of the financial class
Thousands of school-leavers are deep into their GCSE and A-level exams. But this year, for the first time, more than 6,000 of them will be sitting exams in personal finance.
This initiative is part of the Government's plans to educate consumers about a wide range of money matters. It is hoped that by getting schoolchildren familiar with financial products from credit cards to mortgages and bank accounts, then the next generation is less likely to fall prey to the debt traps and mis-selling scandals that have plagued many of their parents.
While the subject is never likely to be as popular as history, geography or French, it is perhaps surprising that in its first year more than 200 schools offer these courses with 6,600 pupils studying for a financial qualification.
While the qualification can be a useful addition to a CV when it comes to applying for a job or higher education, one of the main aims of these courses is to equip young people with the skills to manage their money effectively. The courses, which are run by the IFS School of Finance, cover a broad range of topics, from budgeting know-how and deciphering a first payslip to understanding how APRs work.
Pupils have the option of studying for a Foundation or Intermediate Certificate. Taken together, these are deemed to be the equivalent of a GCSE pass. For those with a clear grasp of money matters, IFS also offers two more advanced papers: a Certificate in Financial Studies and a Diploma in Financial Studies. These are the equivalent of an AS-level and A-level qualifications.
Anne Kiem of the IFS School of Finance says: "There is clearly a need for young people to be educated on financial matters. Recent figures show that over half of England's teenagers have been or are in debt by the time they are 17, and one in five teenagers thinks a pension is some type of bank account. Only last week new figures were published showing that 80 per cent of the British population regularly overspend and this problem is particularly pronounced amongst the young.''
She added that feedback from schools has so far been very positive and all the evidence suggests that following such a course can successfully alter young people's financial behaviour.
But these dedicated courses are not the only financial education available in schools. The Qualifications and Curriculum Authority has introduced units to cover money, savings and spending as part of the Personal, Social and Health Education & Citizenship classes that are compulsory in schools. However, these are somewhat limited in scope, providing only seven-and-a-half hours of tuition over two years.
Kiem says this scatter-gun approach is unlikely to improve the financial literacy of today's youngsters. She adds: "Sprinkling personal finance across the school curriculum as the Government intends will do very little to improve financial capability.''
She says that the Government should take firmer action to compel schools to offer a stand-alone qualification in personal finance, in the same way that schools are required to offer modern languages, history and geography. Not all pupils have to take GCSEs in these subjects but the option has to be there for those who want it.
It is a view that is backed by politicians and regulators, who believe that the only way to head off future problems is to ensure the population is more widely educated about financial matters.
Speaking recently in the House of Commons, Phil Willis, the Liberal Democrat MP for Harrogate and Knaresborough, urged the Government to extend financial education in schools. He says: "Growing up some 50 years ago, the need for financial education was limited. Credit cards, individual savings accounts, overdrafts, student loans, annual percentage rates or even mortgages were as remote as they were irrelevant. But today's young people face a far more complex financial picture. They live in a country where last year 107,000 people became insolvent; 5,300 people a day went to Citizens Advice for debt advice and our combined consumer debt reached pounds 1.3 trillion, more than our GDP.''
He added that this was perhaps not surprising, when recent surveys indicated that 79 per cent of people did not know what an APR meant, 30 per cent did not know what a standing order was and 20 per cent struggled to understand the concept and implications of inflation.
But it seems unlikely, for the moment at least, that personal finance education will gain any firmer foothold in the national curriculum.
Despite the lack of formal education many people have managed to acquire financial skills from the good old university of life. We have printed some sample questions from the multiple-choice sections of the Foundation and Intermediate papers above.
Regular readers of this section shouldn't have too much trouble scoring the equivalent of an A* (although we have included the answers, just in case).
But before decrying falling educational standards and the "dumbing down'' of our school system, it is worth remembering that many young people today do not even possess this basic knowledge.
Those who don't score a full house should pay closer attention to future articles, and may want to enrol in evening classes! Either way, be careful when buying financial products and where possible, seek advice
Source: The Sunday Telegraph
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