Financial education should be made compulsory in all schools in England, a group of businesses has said.
According to The Investing and Saving Alliance (TISA), 40% of adults who weren’t taught about money as children don’t have any savings.
TISA research also showed that people didn’t get financial education when they were young are more likely to be unemployed and earn lower salaries.
At the same time, people who had been taught about money and basic financial concepts were found to be more likely to start their own business and have bigger pension pots.
The findings have prompted TISA to call on the government to add high-quality, consistent and effective financial education to the school curriculum in England.
This, it said, would not only improve economic outcomes, but also contribute to better mental health.
Carol Knight, chief executive of TISA, said: “Improving financial knowledge and understanding at every stage of life is vital and consequently, financial education must begin at a young age.
“There is clear evidence that the delivery of effective financial education during childhood is of great benefit, both from an individual and a societal perspective: helping to increase financial inclusion, financial confidence and ultimately, increase economic growth.”
Financial education can make a big difference to pension savings
Understanding how to manage your money and understanding key concepts and terminology can have many tangible benefits.
But it appears that pension saving could be one particular area where financial education could make a difference.
According to a recent study by Abrdn, lower earners with poor financial literacy have an average of £10,000 less in their pension pots than people on similar salaries with high financial literacy.
But notably, the same pattern is still apparent among those further up the pay scale.
Higher earners with low financial literacy were found to have an average of £87,5000 less in their pensions than high earners who had been taught about money.
Abrdn has similarly urged the government to act and tackle low levels of financial education nationwide, saying it could “a key lever to help build the nation’s long-term financial resilience and improve social mobility”.
Sarah Moody, chief corporate affairs and sustainability officer at Abrdn, said: “It’s often said that ‘money makes money’, but financial education is key to keeping, and growing it.”
Ms Moody stated that addressing this problem would help more people feel financially secure and become long-term savers and investors.
She added that improved financial education would also offer “huge economic benefits”, such as “unlocking millions of pounds of capital and reducing pressure on the state to support people into retirement”.
Written by James Glynn
Senior Financial Content Writer
