Financial literacy and education in the UK has been at record lows for years with many people failing to understand tax and pension frameworks in place.
Around 8 million adults in England have the numeracy skills of primary school children. Currently, only around half of 16–19-year-olds study any maths at all, and the problem is particularly acute for disadvantaged pupils, 60% of whom do not have basic maths skills at age 16.
With more financial affairs in the hands of Brits and a cost-of-living crisis to handle, now has never been a better time for the UK to tackle its financial literacy problem.
In a bid to transform England’s low numeracy rates, prime minister Rishi Sunak has set out plans to ensure that all school pupils in the country study some form of maths to the age of 18.
Sunak said in a speech on 4 January 2023: “This is personal for me. Every opportunity I’ve had in life began with the education I was so fortunate to receive. And it’s the single most important reason why I came into politics: to give every child the highest possible standard of education.
“Thanks to the reforms we’ve introduced since 2010, and the hard work of so many excellent teachers, we’ve made incredible progress. With the right plan – the right commitment to excellence – I see no reason why we cannot rival the best education systems in the world.”
Not just Pythagoras Theorem
The full details of Sunak’s ambitions have not been released but majority of financial experts hope that people are not forced to study a small range of maths.
The usual comment about maths is ‘I don’t think I have ever used Pythagoras Theorem since I left school’.
There is more to maths than algebra and equations. Children should be made to look at mortgages, pensions, investing, compounding interest and taxes.
Richard Wilson, chief executive of Interactive Investor, said: “Basic maths skills are essential. But while learning Pythagoras may be really useful for engineers and budding snooker players, our educators should focus on real world skills for the many so our next generation can invest in their future with a firm grip on the financial basics.
“We need some innovative thinking about how that might look as young people prepare to enter higher education or work. Teaching is a transformative profession and needs to be resourced and respected – and that’s where change can thrive.”
Practical topics
Bethan Lloyd, head of responsible wealth management strategy at Quilter, added: “The world of work has shifted drastically in just the last 20-30 years, and it is more important than ever that children learn the skills they need to succeed in life once they have finished their education. For that reason, Sunak’s plan to make maths compulsory up to the age of 18 will only be effective if the curriculum gives students the practical skills they need for both work and life.
“While improving numeracy skills is a sensible plan, we should be ensuring, as a matter of urgency, that future generations are equipped to be good with money. Financial education should form a large part of this additional compulsory maths curriculum. The current cost of living crisis and the covid crisis before it, illustrate that people’s finances can be rapidly squeezed, and unless you have been taught the necessary skills, the pressure can become too much.
“There continues to be a severe lack of financial capability in the UK, and the only answer is financial education. According to the FCA, in May 2022, 12.9 million UK adults had low financial resilience, which equates to one in four (24%) of all UK adults. Someone might be classified as having low financial capability because they are in financial difficulty or might quickly find themselves in difficulty if they suffer a financial shock because, for example, they have little to no savings or are heavily burdened by their domestic bills or credit commitments.
“Although more financial education won’t help lower bills, it can certainly better equip the nation to deal with these types of financial shocks and Sunak, in his speech, highlighted that this new policy could ultimately help people access better mortgage or savings deals.
“It’s important that any changes to the curriculum also include a greater focus on the behavioural aspects of making good money decisions, which goes beyond maths, as well as ensuring that financial education is something all children learn about throughout their time at school. Good habits are formed from a young age.
“Therefore, helping young children first learn about the merits of delayed gratification and saving, and then, as they get older, introducing more practical topics like pensions and mortgages, will give UK children and young adults a rounded financial education that will help them cope in times like these.”
