Financial education is key to supporting young people facing financial barriers

And it’s not surprising that some young people don’t feel equipped with the skills and knowledge to be financially capable. A recent study found that less than half of secondary school students receive any form of financial education, and this reduces to one in three for primary school children. This is despite research from the Money Advice Service which found that money habits develop from as young as seven years old.

Financial education and social mobility

But it’s not solely issues of indebtedness, overspending or making a bad investment that financial education can help address. Being financially capable provides opportunities that can positively impact on a person’s life chances; for example, understanding how to budget, make price comparisons, or taking on and managing debt appropriately, could enable someone to make more informed financial decisions, which could potentially afford them greater choice and access to opportunities such as education, training or employment.

Receiving a financial education at an early age has the potential to significantly impact the future life chances of young people from lower socio-economic backgrounds, those who face societal barriers, and those in care. Research shows 76 per cent of schools with children most in need of financial education are in more deprived areas. Providing these young people with the knowledge, skills and attitudes to make more informed financial decisions could enable higher earnings, ability to save for future goals and ultimately create positive change in their lives.

Access to relatable role models is also crucial for young people’s financial capability. The opportunity to have a conversation with someone who understands the challenges they face and who has navigated and overcome similar barriers can inspire, educate and open up their mind to a world of possibilities.

Nurturing an enterprising mindset

Mindset also plays an important role in developing healthy attitudes and habits concerning money. Mindset is made up of beliefs, ideas and attitudes and is often informed by our early experiences of the world around us, which extends to how we deal with money.

This can manifest itself in a wide range of behaviours – having the confidence to ask questions about money, our approach to problem-solving finances, understanding goal setting, deferred gratification and the balance between risk and reward.

We know that mindset around money is formed at a young age; that is why we believe it’s essential that all children in primary schools receive a financial education. With so few primary-aged children taught these core life skills, can we be surprised that 67 per cent of young people do not feel confident planning for their financial future and are at high risk of financial abuse, fraud and debt from an early age?

The Covid-19 pandemic has also led to an increase in anxiety around money, with six in 10 young people saying Covid-19 has made them feel more anxious about money. And yet, it’s so encouraging to see young people demonstrating such resourcefulness and an enterprising mindset to take on the challenges they face.

By nurturing future generations of financially capable young people, we have the opportunity to make a real contribution to increasing social mobility. We urge policymakers to see financial education as a vital part of its levelling up agenda and to partner with educators, business and civil society to give young people more opportunities to learn about money, empowering them to build brighter futures, regardless of their starting point.

Sharon Davies is chief executive of Young Enterprise