The Government is facing calls to help youngsters better understand their finances by giving all 16 year olds a bank account.
The scheme would work by giving 16 year olds a bank account when they receive their National Insurance number, said Simon Culhane, chief executive of the Chartered Institute for Securities & Investment (CISI).
Making personal finance a more important part of the national curriculum has also been urged.
A system whereby a 16 year old only has to complete one form to decide which bank they would like to join has been raised.
Mr Culhane said the initiative would help children understand personal finance at a much younger age, especially as online payments and transfers become more popular.
At The Financial Fairy Tales we applaud the encouragement for young people to open bank accounts and a simplification of the account opening process which can be daunting to many youngsters. Making something mandatory however makes us more uneasy. After all you can lead a horse to water but you cannot make it drink. In other words forcing youngsters to open accounts will not automatically lead to their use or an improvement in financial literacy.
The suggestion comes after last month’s debate in the House of Commons about making finance lessons a bigger part of children’s learning – a proposal which garnered support from all parties.
There are worries that children are not being suitably prepared to deal with their finances.
Within families, about 19% of parents have never discussed with their teenagers how to spend money and 32% have yet to talk about how to budget, or even describe what one is, while only 36% of people understand that the term APR relates to interest payments.
Currently, aspects of personal finance are covered in the personal, social health and education module taught in schools, but there are no exams to take.
The CISI says the current system does not go far enough and is ‘almost universally derided by pupils and teachers alike’.
There have been movements towards making financial education part of the national curriculum in England and Wales from the next review. However we would urge that it is not buried in a Maths curriculum which is already failing many young people but rather integrated into life skills and PSHE sessions to draw upon the skills and experience from other subject areas.
