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Teaching personal finance in schools

The credit crunch and continuing debt problems being experienced by Brits have thrown the importance of knowing about personal finance issues firmly into the spotlight.

And the answer to ensuring the same problems are not experienced in the future - for more than 140 members of parliament and the Personal Finance Education Group (PFEG) at least – is targeting school children.

One of the largest All Party Parliamentary Groups (APPG) was recently formed to fight for personal finance becoming part of children's education, and it is a position which, according to one survey, is supported by 97 per cent of the public.

Wendy van den Hende, chief executive of the PFEG, said: "Although some excellent work has been done in schools, the delivery of personal finance education on a national level is patchy. If we want the next generation to be financially capable we need financial education at every stage of their school life."

ifs School of Finance also welcomed the creation of the APPG, saying there is a need for "structured" education in this area. Rod McKee, Head of Financial Capability at the organisation, said: "The provision of financial education is less effective when there is a reliance on delivering it through other subjects such as Maths and Citizenship or through generalised topics in personal, social and health education (PSHE)." As well as dedicating specific periods in the school day to the subject, he said: "It is imperative that any financial education offered in schools is properly assessed."

However, introducing what is effectively a new subject into schools is likely to have an effect on those involved in the teaching profession and there could be potential problems in finding the staff with the requisite knowledge. Steve Webb, the Pensions Minister, is among those expressing these concerns, the Financial Times reported. He said there would be difficulties training new teachers with expertise in the area of personal finance and suggested the subject could in fact be integrated as part of Maths lessons.

This is not to say that many children do not already receive some form of teaching about personal finance within school. PSHE became compulsory for all children in Key Stage 1 through to 4 in 2008. Recent research by Sheffield Hallam suggests the subject has now become well integrated in nine out of ten primary schools and eight out of ten secondary institutions. The figures seem encouraging on the surface, however some aspects of PSHE education are granted much greater prominence than others.

Three-quarters of primary schools were said to be teaching lessons on emotional health and wellbeing a week. In contrast sessions on other topics, including personal finance, were taking place once a year or less in between 59 per cent and 74 per cent of all primary schools.  Ensuring PSHE provision covered all topics was even less frequent in secondary schools.

"Overall, the economic wellbeing elements of PSHE education were often seen as separate, and rarely or poorly fully integrated into PSHE education planning and delivery in case study schools.  "It was often led and taught by different members of staff from the personal wellbeing elements, and seldom given the same priority or prominence," the report noted.  While the majority of both secondary and primary schools viewed the overall provision of PSHE as effective, the figure was lower when it came to the specific provision of the personal finance aspects.

"Personal finance/financial capability and enterprise education were seen to be by far the least effective elements in primary schools, with about half viewing these elements as less than effective," the researchers said.
In secondary schools, less than a quarter of institutions viewed personal finance education as effective.  The UK is not the only country which is assessing the importance of personal finance education in schools.
Lauren Willis, Professor at Loyola law school in Los Angeles, in 2009 told the Guardian that there are 28 states which require the subject to be taught in some form in schools, but there is little evidence that the subject has long-term benefits.

"After taking a course, students say they intend to change their financial behaviours, but follow-up studies reveal virtually no improvement," she explained. She added in some cases the classes could even be "counter-productive" and cause students to adopt more risky financial behaviour. "US high school seniors who have taken such personal finance courses have slightly lower scores on tests than students who have not," Ms Willis said.

The outcomes, however, are not likely to be the thing most worrying teachers about the subject. Research suggests there is still much confusion surrounding financial terminology among UK adults, and if this becomes a requisite for a teaching position it could make finding employment that much harder.