Compulsory Financial Education For Teenagers

Financial education is something I would love to see implemented in all schools across England because there are so many people that are so financially illiterate that it beggars belief. Many people, including myself, learned the hard way that credit cards and overdrafts were not requirements for living but luxuries and fail safes to be used on occasion. Ask anyone what APR actually means and it’s probably only a financial advisor that could give you an accurate definition. How many people are aware that if you withdraw cash on your credit card you are charged a higher rate of interest? Or that buying a new car is a depreciating liability rather than an asset?

Credit cards, mortgages, stocks and shares ISA’s, buy now pay later, car loans, pensions; all of these have their place (the jury is still out on pay day loans!) but no one gets taught how to use them effectively, so lets make it compulsory teaching for all teenagers.

Make financial education a compulsory part of the school curriculum – e-petitions financial education a compulsory part of the school curriculum Responsible department: Department for Education It’s a national disgrace that in the 20 years since…

2 Comments Compulsory Financial Education For Teenagers

  1. Ed Drake

    Interesting post Pete. I half agree with you.

    In South Africa, ‘financial maths’ is in the high school curriculum. Questions in the exam cover topics like calculating car loan repayments, depreciation, pension pot saving etc. Even though it is on the curriculum, financial maths questions are very poorly answered in the exam and young South African adults seem to make very poor financial decisions.

    I don’t think that there is too much value in knowing what a depreciating liability is, how to calculate bond repayments or how to calculate APR from nominal interest rates. Financial institutions will do that work for their customers.

    What is essential is to learn that you need to consider the APR and bank charges when we choose a savings account or loan. To see that if you buy furniture on finance that says “no payments for first 18 months and then 42 easy monthly payments (22% p.a. interest)” then you are going to be paying 2 times as much compared to if you paid in cash. To see that if you buy a car on finance and write it off without insurance 1 month later then you are going to be paying each month for a car that you can’t use.

    What is scary in South Africa is that many of the teachers who are teaching financial maths are making very poor financial decisions. Buying Mercedes on finance that they can’t afford on their salaries etc. Even when people know the theory, if we live in culture where man is the sum of his possessions, then unaffordable debt is always going to be a problem.

    BTW, your blog layout is visually appealing but the links at the top are not working for me. Also the comments box is too small (or my comment is too long).

  2. Peter

    Very good points, Ed! I don’t recall there every being any financial education in England like what you mentioned for South Africa. Even if it doesn’t stop the crazy Mercedes purchases, maybe it will at least make people understand that they could be getting a bad deal so it becomes more of a bad informed decision rather than a bad ill-informed decision.

    A while back I was looking in to stocks and shares ISA and was just blown away by the number of options available; thousands of funds to choose from, dozens of companies to go through, self serve options, ‘wrappers’, understanding all the fees and charges, it was quite mind boggling. In the end I bought shares myself through an ISA.

    RE: blog: Thanks for the comments, It’s still very much a work in progress, the header and footer links don’t work yet, but I fixed the stretchy box now!


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