There’s no doubt that financial literacy remains a significant issue in the UK, with an estimated 39% of adults (20.3 million people) suggesting that they don’t feel confident managing their money.
With around nine million Brits also in serious debt, it’s clear that an underlying lack of financial literacy and knowledge can lead to significant fiscal issues over time.
In this post, we’ll discuss the importance of financial literacy further, while asking why it should become a central component of secondary education.
What is Financial Literacy and Why is it Important?
In simple terms, financial literacy refers to the confident understanding of various fiscal concepts, from saving and investments to the impact of interest rates on your total debt burden.
The goal of building such comprehension is ultimately to establish a sense of control over your finances, creating a scenario where you can successfully optimise your earnings and make choices that lead to an improved quality of life.
On a fundamental level, financial literacy also translates into the ability to accrue wealth and navigate unexpected issues, such as a sudden job loss or decline in earnings.
With these points in mind, the importance of financial literacy is evident, but it’s also fair to surmise that individuals with this ability are far better at calculating their disposable income and allocating this to specific goals.
Without this skill, it can be incredibly difficult to make informed spending and saving decisions, impacting your finances negatively on a daily basis.
Is There a Crisis and What are the Solutions?
Under David Cameron’s government in 2013, we saw a proposal to make financial education mandatory in secondary schools throughout the UK.
However, this mandate has failed to deliver results over time, with a recent survey commissioned by Ipsos Mori finding that a staggering 90% of people in England admitted to learning “nothing at all” or “not very much” about finance at school.
This is thanks largely to a lack of expertise in the classroom, with many teachers feeling ill-equipped to teach the basics of this topic to students.
Despite this, there’s little doubt that financial education for secondary school pupils represents an excellent way of solving the lack of literacy on these shores, particularly if there’s a clear focus on core money management skills and the teaching of how interest impacts on debt liabilities.
Another solution could also be to change the mindset of Brits, who have historically sought to improve their financial circumstances by saving and cutting costs.
However, it may be more prudent to seek out additional income streams through the financial markets in the current climate, particularly when you consider how the cost of living continues to rise and the rise of hybrid or remote working in the modern workplace.