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Financial Education in New National Curriculum?

Financial education is back on the political agenda as Labour MP Thomas Docherty introduced a private member’s bill in the Commons calling for financial literacy to be included in the national curriculum. pfeg (the Personal Finance Education Group) who are the UK’s leading financial education charity and have been campaigning on the subject for 12 years welcome the bill and the opportunity to further the policy debate.

The bill follows the e-petition launched by Martin Lewis of moneysavingexpert.com calling for compulsory financial education in schools. The petition was one of the first to achieve 100,000 signatures and was debated in the House in December 2012.

pfeg are in complete agreement with Mr. Docherty that financial education ‘should be part of the provision of the national curriculum’. This recommendation was also made by the All Party Parliamentary Group on Financial Education, for which pfeg provides the secretariat, in the Financial Education and the Curriculum report released in December 2012.

Mr. Docherty went on to recommend starting financial education with students aged between 14 – 16 years old. pfeg advocates that financial education should be available to all children and young people aged between 4 – 19 years. This recommendation is in line with the recent Impact Review of Financial Education for Young People conducted by the Money Advice Service, which confirmed that attitudes to money are formed early. pfeg believes that financial education should begin as early on in a young person’s school career as possible and should continue in progressive way year on year.

This is a view strongly supported by Daniel Britton, author of The Financial Fairy Tales which help create positive values and money references from an early age.

Mark Fiander, the Strategy and Innovation Director, at the Money Advice Service said:

“We want everyone to be financially capable. Equipping young people with money skills for life is a key foundation for achieving this goal and we believe an essential building block is the provision of financial education in schools. This is why the Money Advice Service fully supports the work of the APPG on Financial Education for Young People on developing sustainable model for educating future generations. The introduction of Mr. Docherty’s bill – calling for financial literacy to be included in the national curriculum – is a step towards getting this issue back on the agenda. We look forward to the debate early next year”.

The second reading of the bill is due in January 2013. A review in to the national curriculum is currently in progress. pfeg would recommend that discussions on the inclusion of financial education in the curriculum are advanced as soon as possible to guarantee consideration from the Department of Education.

pfeg are firmly of the belief that financial education provision in schools is the most sustainable and ‘catch all’ solution to providing young people with the knowledge and skills they will need to manage their money, make key financial decisions and develop in to responsible consumers on leaving school.

Pensions Report Reveals Lack of Financial Knowledge

The latest Friends Life Visions of Britain 2020 report shows the education system in the UK is felt to have failed to provide recession hit Britons with now-needed financial knowledge. The Pensions Reform report has been compiled on behalf of Friends Life by The Future Foundation and is entitled “Pensions: The Root Problem”.

Some 83% of the UK population believes not enough is being done to educate people in financial matters, according to the study. And 63% said they wished they had received financial education lessons in school. Similarly, 65% thought that “financial advice should be provided in the workplace.”

The study by think tank the Future Foundation found that as a result of this lack of financial education only one in five people believe the nation’s children will be more savvy about money matters than previous generations, with nearly half (48%) disagreeing.

The study also found that this lack of financial awareness has had the knock-on effect that increasing numbers of school leavers and graduates have no idea where to find advice on pensions, for example, with over 65% of 18-24 year olds not knowing how to get this advice.

Martin Palmer, Head of Corporate Benefits Marketing at Friends Life, said:
“It is clear from our findings that there is a desire from the younger generation to have better knowledge on how to deal with their money matters. We are advocates of personal responsibility, but think more could be done in schools. However, we believe the workplace is the best and most effective place to provide financial education as people actually have some pay to spend and more choices to make.

“The current economic climate is not helping the situation and people will have other financial commitments or priorities, but we need to help individuals get to a position where they see the real value of putting money aside for the short, medium and longer term.”

Engagement and communication with the younger age groups is also an issue as more than a third (34%) of 18-24 year olds and over a quarter (26%) of those aged 25-44 said they found pensions “too boring” to interest them.

Palmer of Friends Life continued:
“The challenge is to start using different forms of media to communicate with people. We need to try to communicate less information but to do it in a more effective way. At the moment, as an industry, we tend to bombard people with loads of information leaving them unable to see the wood from the trees.”

Personal Finance Education Awards

Six schools across England and Scotland are celebrating after winning awards at this year’s RBS Personal Finance Education Awards for Schools, the only awards to recognise those schools that teach students all-important money management skills in an innovative and successful way.

Taking home awards at this year’s event, which was held at Altitude 360 in London, were winning:
– For the Best All-Round Approach to PFE Award (primary): joint award for St Budeaux Foundation Church of England School in Plymouth and Westdene Primary School in Sussex.
– For the Best All-Round Approach to PFE Award (secondary): St Luke’s High School in East Renfrewshire.
– Best Teacher Award (primary): Ms. Eveline Dawson at Waltham Leas Primary in Grimsby.
– Best Teacher Award (secondary): Miss Helen Kemp at Humphrey Perkins High School in Loughborough.
– Best Student Award: Students at Roseberry Sports and Community College in Durham.

Staff and students from the Humphrey Perkins SchoolJudges from across the education and finance industries were impressed by the range of creative approaches schools have adopted to engage students in money management. Entries showcase a variety of activities from the entrepreneurial – challenging students to set up and run a business from scratch and make a profit – to the practical, teaching students about the real value of money through lessons like “What would you do with £1 million?” and showing them the impact that money they have raised can make in developing countries.

Other school programmes recognised in these awards included a peer mentoring system where a select group of students acted as ‘money experts’ for their fellow pupils, offering advice and giving presentations in assembly. Each category winner is awarded £1,500 for their school, and individuals also received a prize such as a laptop.

Founded by The Royal Bank of Scotland Group in association with PFEG (Personal Finance Education Group), the RBS PFE Awards are open to entrants from across England, Scotland and Wales. This year marks the fourth year of the Awards, which recognise best practice and build on RBS’ 17 year heritage in personal finance education.

Primary School Winners

St Budeaux has taken a very progressive approach to learning about PFE, from encouraging good money habits in students, to teaching them how to save and budget, and ensuring they understand the real value of money. During their ‘Money Week’, activities included seeing the difference that money they had raised made to families in Haiti, working with a poet to explore finance creatively through writing, and trying to make a profit selling products from an initial £5 budget.

Westdene Primary has built a programme of activity that appeals to children of all age groups; singing songs with younger groups, creating board games that encompass winning and losing money, and debates among groups on topical issues including “Why pay tax”. Through its strong PFE programme, the school has developed many interesting ways to raise financial awareness.

Secondary Schools

St Luke’s High School, East Renfrewshire has adopted a creative approach to delivering PFE across all year groups. Topics covered in the money lessons vary according to year group and range from ‘What would you do with £1million?’ to ‘Jobs in the real world’, and also covers off practical applications such as how to pay for a holiday and other ‘big’ purchases.

The MoneySense for Schools programme has recently re-launched its website with brand new interactive resources. You can access the new website here: http://moneysense.natwest.com/schools. All resources are accredited by PFEG for their quality and impartiality.

7 Essential Components For Financial Literacy

At the Financial Fairy Tales we welcome the news that the UK Government has begun a consultation into creating a compulsory Financial Literacy curriculum. Here we have an initial 7 points that are essential financial skills that all young people should leave school with.

1. Manage your money. Show your money who’s boss by putting a money management system in place. Divide your income into separate jars, money boxes or bank accounts. Take a proportion and save it. Take another and allocate that for investing. Then work out how much you need to spend on essentials. From the remainder you can put some aside for fun and leisure.

This simple system has several powerful principles, paying yourself first, creating a savings habit and being organised with your money and to spend less than you earn and invest the rest.

2. Know the true cost of buying on credit. The availability of easy credit has become a part of society. Don’t be tricked however into taking the short term view that the headline monthly payments are all matters. Buying an average car for example at 10% APR over 3 years could mean paying over £5000 extra. If that was the sticker price of the car then you may not be so keen to buy. Also consider that your circumstances may change, would you still want to be saddled with monthly debt repayments if you lost your job?

3. Be in control of your outgoings. The simple process of checking bank statements and credit card bills can ensure that you know where your money is going and can check for mistakes and anything suspicious. You may have unwanted direct debits which relate to cancelled agreements, such as gym memberships or mobile phone insurance. If you track and classify your outgoings, you may find that you are spending hundreds of pounds on lunch and coffee which you could bring from home.

4. Understand the financial realities of home ownership. For the majority buying a home is the biggest financial purchase of their lives. Many young people however are poorly equipped to understand the process or the numbers involved. It can be explained by imagining a dream home and then working backwards. With many lenders looking for a deposit of 20%, the prospective home owners need to first consider where they can obtain this and how long that might take. Then they can consider the amount of borrowing they can obtain, be that 3 or 4 times salary for example. Thirdly include the additional costs of insurance, utilities and council tax.

For many young people this will be an important wake up call, which can have a dramatic effect on career and education choices.

5. Develop multiple streams of income. All is not doom and gloom however, for the entrepreneurial minded there are an abundance of opportunities to make money either alongside or instead of a traditional career. A hobby or passionate interest can be translated into an income earning blog or website. Existing skills and talents can be taught to others at a fee, or new products and ideas brought to market. Long term investments in the stock market or property have historically yielded good returns. All of which can combine to supplement or replace traditional earned income.

Your hobbies can translate into a good income generator. For instance, you can hone love for baking by supplying many homes with fresh bread and pastries. Or, you can become a pet sitter if you enjoy taking care of animals. You should also note that you can even earn some good money out of many games, which is good news if this is your favourite pastime. You can be a pro gamer and win tournaments. Or you can engage your favourite casino games online, although cybersecurity should be a priority. As a tip, use this safe deposit option for UK users for the best experience.

6. Invest in your own education. For many learning stops once they leave school, if not before! By continuing to learn whether its job related or developing new skills you are capable of bringing more value to the market and subsequently will receive more reward.

7. Expect the best but prepare for the worst. When jobs are secure and house prices are rising it is easy to be lulled into a false sense of security. Many people released equity from the homes to cover consumer debt, secure in the knowledge that they could meet the monthly payments and maybe even reduce their outgoings in the short term. When the economic climate changed however there was a new reality.

In uncertain times it is better to expect the best but prepare for the worst, by saving an emergency fund which could support you for several months if you lost your job or to give you the freedom of trying something new. So too is insurance important, covering sickness or unemployment. Developing multiple streams of income as outlined about is another way of spreading the risk and not being over reliant on one source.

THREE SIMPLE KEYS TO EMPOWER YOUR KIDS FINANCIALLY

by Elisabeth Donati, author of The Ultimate Allowance – Founder Creative Wealth Intl., LLC

Creator of Camp Millionaire & Creative Wealth for Women Workshops

You may be thinking to yourself, “Is there something I can do to make sure my kids don’t move home after they move out?” In other words, you want a way to make sure they grow up to be financially self-reliant. I’m here to say, ‘Yes, there are some relatively simple steps you can take to ensure that your kids leave home knowing what to do with that green stuff they will be in charge of making, managing and multiplying in the future.

More young adults are not only leaving college these days because of financial problems (student loan and credit card debt) but they are also moving back home after they graduate because they simply don’t make enough money to go it on their own.

The primary cause is simply that kids don’t have a clue what to do with their money, or anyone else’s for that matter. Most of them are very good at spending money, but it’s a rare 20-something that understands the dangers of credit card abuse or the power of saving and investing. Heck, for that matter, most adults don’t understand these concepts either.

Imagine this scenario…

Your son (or daughter) comes to you one day and says, “Mom, I have decided I really want to grow up and become a major league ball player.” You say, “Wow, that’s cool. Good for you.” And you go back to doing what you were doing. Your child looks at you and asks, “So, would you get me a ball so I can learn how to throw it?” You say, “Maybe later.” He says, “What about a glove and a bat?” You respond, “Nah, I don’t think so.” He’s a frustrated at this point and asks, “OK, but will you at least teach me the rules?” You say, “Oh, you can learn the rules later.” Now he is really angry; he’s fuming inside and feels stuck. Finally he gets really mad and yells, “But MOM, how am I ever going to become a great ball player if I don’t have a ball, bat or glove to practice with and I don’t know the rules?”         

This is what parents do, most unknowingly, to their children everyday in regard to money. We grow them into adults but rarely give them the equipment or rules to practice, and get good at, The Money Game!

Let’s look at three simple steps you can take to empower your children with the tools, knowledge and practice they need to grow up financially free.

FIRST, you must set the best example you can for your child. Since human beings learn best by example, it is critical that you first examine what you’re teaching your children through your actions because they really do speak louder than words. How can you expect your child to save and invest if you don’t? How can you expect your child to grow up with a healthy understanding of money if you don’t have a healthy understanding of money? How can you expect your children not to use credit cards if the only way they see you buy things is with a credit card?

The important thing to remember is that children learn from us three ways: by what they see us do, by what they hear us say and through the experiences they have with money. J know that they are always watching and learning from you in ways you probably aren’t even aware of.

If you’re like many adults who don’t understand money, you’re not alone.  You weren’t taught when you were young either, however, now’s the time to make a commitment to educate yourself. There are books and seminars everywhere. A great place to start is a program called the Millionaire Mind Intensive. For more information, visit http://www.peakpotentials.com/a/tofreedomandbeyond.

If you’re doing well financially, good job. Keep asking yourself how you might ‘show’ your kids about money with your daily routine and include your kid’s friends. Kids often learn better from people other than their parents so look for opportunities to influence all the kids in your circle.

SECONDLY, talk to your kids about money. Take every opportunity you can to open up a line of conversation about family expenses, credit cards, debt, interest, investing, business, real estate, the stock market, financial beliefs, etc. Some examples of when to talk to your kids about money are:

•   When you take money out of the ATM, talk about where the money comes from, why you can only take out so much, etc.

•   When you pay for the groceries with a credit card to get points so the whole family can go on vacation, make sure they understand the importance of paying the bill off EVERY SINGLE MONTH!

•   When you pay bills, let them help you write checks or pay the bills online. Teach them how to check the accuracy of each bill.

•   When you deposit money into your bank, visit your investment advisor or accountant, take your child along.

The worst thing you can do is assume that someone else is teaching your child about money. What children learn from parents who don’t talk about money is that talking about money isn’t OK. A healthier way to look at money is simply as a tool to reach your dreams (a Creative Wealth Principle); it doesn’t mean we’re better or thinner or smarter than others. It’s simply a tool.

THIRDLY, consider giving your child an allowance, but not the kind you may be thinking of. In my book, The Ultimate Allowance, I teach you how to take the money you already spend ON your child and run the money THROUGH them instead. I’ve read that it takes an average of $275,000 to raise a child through age 17. If you run even a portion of that money through your child, imagine the practice he or she is going to get. By making plenty of financial choices—good and bad— they learn the ins and outs of money management before the consequences aren’t so damaging.

In summary, remember that human beings learn best by example. Your children are watching everything you do with your money, listening to everything you say about money and internalizing all the experiences they are having with money, so pay attention to the example you are setting.

And finally, please talk to them about everything financial. It’s the best investment you can make in your child’s financial future and we promise it will ‘pay off’ in the end!

For more information on all of our unique financial literacy products and programs, please visit The Ultimate Allowance and Creative Wealth International or give us a call at 800-928-1932.