Financial educators get it wrong

What age do you need to be to benefit from financial education? "Is it too late at 11, 12 or 13?" That's what the venerable Paul Lewis of Radio 4's Moneybox asked Tracey Bleakley of the Personal Finance Education Group this weekend. 

There's a right answer to this question. It goes like this: No, don't be daft. Of course, it's not too late. People develop at different rates and most of us never stop learning. People can and do change their habits throughout their lives. And anyway, most of us learn by doing. You can't properly "do" money until you start handling it for real, making proper choices about spending, saving and the rest.

It's preposterous to suggest that if primary schools don't do financial education, a generation will be doomed to spend their lives unable to make ends meet, keep track of their money or plan ahead. Think about it, Paul. When were your generation first exposed to financial education? If age 11 to 13 is too late, how did you get to be so financially guru-like? 

Was this sensible and correct answer the one that Tracey Bleakley gave? It was not. She said, "We believe it is [too late]". I appreciate that the financial education industry is delirious with excitement. After years of marginalisation they have now found their place in the sun of the (increasingly irrelevant) national curriculum. But this is really not helping. 

The trigger for some of Paul Lewis's questioning is a report published a few weeks ago by the Money Advice Service suggesting that adult money habits are set by the age of seven. A press release claiming that got the headlines it hoped for, though it was being rather economical with the reality. 

The researchers have a rather more sophisticated definition of habits than the press release allowed for. In fact, the report. Habit Formation and Learning in Young Children isn't research at all. It's a deeply fascinating literature review of over 100 research studies looking at how young children learn. Some of the evidence is unsure, some doesn't apply. But the authors, Dr David Whitebread and Dr Sue Bingham of the University of Cambridge, have done an excellent job in drawing together some helpful advice - to guide teachers and parents. Here are a couple of key points worth remembering: 

> Children under 8 years have not yet developed an understanding of the social significance of using products in different contexts, nor of the difference between luxuries and necessities. That should give pause for thought. If you are developmentally incapable of distinguishing needs and wants, there's a big part of adult money management that you have no habit for whatsoever at the age of seven. 

> The evidence indicates that "teaching young children explicit forms of ‘financial’ knowledge per se is likely to be ineffectual in shaping or changing their behaviours". Got that? It's so clear it's hard to paraphrase or say more simply. I'll try: teaching financial education at a young age doesn't work. 

And finally, as a cheap shot and because I can't resist it, here's another insight from the research review, that might help with forming attitudes to financial education in schools: 

> There is little evidence of significant success in improving children’s educational outcomes through the use of digital technologies in schools, in spite of the fact that between 2007 and 2012 more than £1 billion was spent on items ranging from interactive whiteboards to tablets in classrooms.

Do you really want schools, which blew £1 billion on toys & gadgets that don't do any good, giving children lessons on spending decisions?

PJ White is editor of Youth Money