There is a lot of financial advice around directed at young people … but do they listen?
Who should be responsible for trying to get the message across? Schools? Parents?
Perhaps, like computers and the internet, you are supposed to pick it up by osmosis.
Young Money, a charity supporting schools, colleges and universities, sums up the challenge: “The case for young people to leave school able to be in control of their money and to plan for the future has never been stronger.
“Children and young people encounter money earlier and earlier – spending and saving their pocket money, mobile phones, pre-paid cards and part time jobs. Crucial decisions have to be taken about student loans, getting a job or living independently.”
It offers a Parent Guide on how to talk to children about money.
The Personal Finance Society has an Education Champions scheme designed to teach basic skills in secondary schools.
It covers areas like staying safe from scams, explaining a payslip and how income deductions work, and the difference between ‘low’ and ‘high’ risk.
The Government’s Money Advice Service is making financial education a critical and strategic priority.
One handicap is that financial education doesn’t always fit with schools and teachers.
Barclays LifeSkills notes: “It’s difficult to get your head around developing financially capable young people when you’re not 100 per cent confident in the topic yourself. Maybe planning ways to save doesn’t come easily to you. It can be challenging to impart ‘expertise’ if you don’t feel particularly money savvy yourself.”
Others are even more blunt such as this online comment: “Most 14-18 years do not have the mental capacity or current need to research financial matters beyond the most immediate. There are two exceptions. Children who have what used to be called Saturday jobs and those who contribute to the success of their family businesses. These young people are normally always ambitious to learn and challenge in this area.”
Worryingly, as is young people’s want, they turn to social media.
The Financial Conduct Authority claims 27 per cent of young investors research their investments on YouTube, while 25 per cent use a combination of Instagram, Twitter and TikTok.
Personal finance writer Jessie Hewitson believes leaving financial education in the hands of such elements is “a recipe for disaster”.
She too does not believe teachers are the answer. “Teachers aren’t going to do it effectively. There is a danger that lessons on mortgages and pensions may be so boring that they put people off personal finance for life (sorry, teachers) and for most pupils, the future – buying a home, drawing down a pension – feels so distant that it’s going to be hard to motivate them to learn about it.”
Therefore, it’s down to parents.
In a Sunday Times article, Jessie went on: “Parents need to add the money conversation to their repertoire of must-have chats with children, alongside sex, caution with strangers and the dangers of the online world.”
Her solution for her own children? “My plan is to have a series of chats when they are captive, strapped in the back of the car when I’m driving, all phones confiscated, and I’ll tell them about my money philosophy.”
There are many different approaches.
“We played Monopoly, with our children and grandchildren,” comments a blogger. “No holds barred – learning about the value of returns on capital invested in Mayfair or Old Kent Road.”
Cover the basics – spending versus saving; compound interest; the link between working and earning; long term saving and pensions; risk and the concept of a balanced portfolio.
And, please, try to make it lively.