Over the past year, the world our children are inheriting has increasingly been affected by financial instability. The cost of living pressures and rising inflation have laid bare the need for Britain to be better prepared for economic hardship, whilst soaring energy prices have left families across the country having to make difficult decisions with the money in their pockets.
This should not have been a surprise. The generational economic shocks of the 2008 financial crisis and the coronavirus pandemic should have provided a renewed impetus to consider how we can prepare our children for the next challenge. Yet children in this country are still not adequately equipped to effectively manage their finances with the UK ranking 15th out of 29 OECD countries for financial literacy.
The problem is not just the disastrous impact that poor financial literacy can have on family finances. Financial inclusion is also central to the economy. The Government has talked about creating an environment for growth and entrepreneurship. But you can’t create a business plan without a basic knowledge of how to budget.
These challenges are urgent. If we are to help people navigate financial uncertainty, we must increase financial literacy.
How then can we help people through the rising cost of living crisis and high inflation? How can we give people the tools to start businesses, unlock their potential and in doing so create growth across the UK? If we are clear about what we need to achieve, then it becomes easier to think about what the practical solutions might look like.
We could start by reforming the Maths GCSE to make it comparable to the broader GCSE offer for English, which has two GCSE subjects – English Language and English Literature. Our current Maths GCSE is essentially a Maths Science GCSE for STEM students. It is akin to only offering the Maths equivalent of English Literature. It misses out the core applied maths skills people need for future life whether or not they want to also become an engineer.
One alternative is to have an Applied Maths GCSE sitting alongside it, but able to focus more broadly on the core financial literacy we will all need in later life, including statistics, prediction, budgeting and business case development. Of course, with two Maths GCSEs it could free up a separate Maths Science GCSE to be even more stretching for STEM students. Plus, financial literacy ties into the Government’s focus on promoting science, technology, engineering and maths skills as it helps with the translation of these skills to the real world.
Teaching children about savings, money, the pernicious impact of inflation, and the financial services and advice available to manage shocks could also help parents. When school days are discussed on the walk home or at the dinner table, hearing about financial education from your child could be the simple nudge needed to get parents to save or seek help.
Financial literacy skills of course support professional life, but can also equip a generation of young entrepreneurs to start their own businesses, creating growth in cities and towns across the country and turbocharging the levelling up agenda.
Some progress for financial literacy is being made, not least among some of the businesses signed up to the Social Mobility Pledge. For example, fintech firm True Potential has partnered with the Open University to create the True Potential Centre for the Public Understanding of Finance, offering free financial education online courses to the public. Almost one million people have accessed the courses to date.
It may be too late to reform the curriculum this year, but economic shocks will come again and improved financial education can ensure we are better prepared. The new Education Secretary, Gillian Keegan, must ensure financial literacy is at the forefront of her thinking when it comes to education reform.
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