If you remember having lessons about money in school, you may be in the minority. When I say lessons about money, I don’t mean the odd maths question, the type that goes: “If Sam wants to buy KitKats and he has £1, and the KitKats are 32p each, how much change would Sam have if he bought three KitKats?” I suspect we all had a few of those.
I mean structured courses in maths that consider things such as compound growth, covers definitions for things like credit and debit, balance transfer, overdrafts and stocks and shares and explores subjects like, why do we pay tax and what is a pension?
Initiatives exist to improve personal finance education in schools: the Money and Pensions Service created the UK Strategy for Financial Wellbeing, the charity MyBnk pioneers fun and practical financial education programs and there are initiatives such as the interactive investor Personal Finance Teacher of the Year awards to inspire teachers to cover this area in an imaginative way.
It is so important to individuals to understand how personal finance works before they leave home for university and have their first opportunity to go into debt. If your parents are also not very clued up, then it’s an understanding gap that is perpetuated through generations within families.
Proper personal finance education can have huge social benefits in its own right. This makes it a sustainability exercise. It meets four of the UN Sustainable Development Goals: No Poverty, Good Health and Well-being, Quality Education and Reduced Inequalities, through giving people the ability to manage their own finances from the very beginning of adult life; To avoid debt, build up savings and feel confident rather than stressed about money.
But it could potentially go one step further, too. It could transform our general understanding of the function of money, from a means of exchange and a store of value that’s main purpose is the acquisition of stuff, to a way to vote for the world we want and improve everyone’s general wellbeing through consideration of where we spend, store and invest our money.
It might seem like jumping the gun a bit to suggest that personal finance education could resolve the climate crisis when personal finance education in its most basic form has barely taken root in the country’s schools. But by the time we are adults, our view of what money is and what it does is relatively fixed.
For example, if you learn at school about the power of shareholder activism – that investing in companies not only gives you the possibility of a financial return but also a voice in the way companies are running – would that inspire younger people to invest earlier in life and take an active interest in financial markets?
Through teaching children about the stock market and the productive use of their own money, they would be inclined to not just put money in a savings account, or a house, but to back the innovations of the future, in areas such as renewable energy technology and healthcare?
Many adults are learning about where their money goes now. Would they have made different choices if they had fully understood at 18 what their investment options were and how they could make a difference with their own money?
We know that young people care about the climate crisis. The school strike for climate started by Greta Thunberg and continued by millions of children around the world demonstrates the strength of feeling and understanding. It is their future. We also know young people have many financial challenges ahead of them: paying off student debt, finding decent work, paying off other debt, being able to afford rent, buying a first home, and so on.
They will need good financial education to navigate all of their individual challenges. If teachers can find another lever to engage children in the power of money – the climate crisis and the power of money to fund the energy transition, for instance – then just maybe there is a way for personal finance education, in a roundabout way, to Reach some of the other UN Sustainable Development Goals: Affordable & Clean Energy, Responsible Production & Consumption, Climate Action and Sustainable Cities & Communities and help improve individual financial management as well as the planet.