By Carly Sandy (Communications Division) and Andrew Hebden (Communications Division).
The Covid-19 (Covid) pandemic has had a profound effect on the way we live our lives. It has impacted our relationship with the economy by changing the way we work and where we choose to live. And it has affected our relationship with money by accelerating the transition away from cash and towards digital payments.
What are young people to make of all this? How can they prepare themselves for a financial and economic world that is changing so rapidly? Young people get their financial education from various sources – including at school and in the home. But provision can vary between schools, and some parents feel more comfortable than others talking to their children about money. The decline in cash use presents a specific challenge given its role in many children’s earliest financial education – from piggy banks to pocket money.
This article explores the provision of financial and economic education and how it is evolving in response to a changing economic and financial world. It focuses in particular on financial education in schools and the barriers to increasing provision in the classroom, including drawing on newly commissioned research from a panel of more than 7,000 teachers. It also explores the consequences for financial education of the declining use of cash, and the challenges and opportunities offered by a move to more digital payments. While it does not profess to offer the answers, it does set out some key questions that merit further discussion.
Introduction: what is financial education?
Financial education is any activity that helps young people develop the knowledge, skills and attitudes they need to manage money well, make informed financial decisions and achieve their goals. It can cover a wide range of topics, responding to the needs of young people, from payslips, budget management and mortgages, to understanding the impact of money on relationships, the difference between needs and wants and how to manage risk.footnote 
Financial education features in the National Curriculums for England, Scotland, Wales and Northern Ireland. In England, it made its first appearance in 2014 as part of the Citizenship syllabus.footnote  Today it is often taught in secondary schools as part of Personal Social Health and Economic (PSHE) education and represents one of many important topics delivered through a curriculum subject that is non-statutory.
That non-statutory status has long been a concern for those who make the case that more prominence needs to be given to financial education in schools. Inevitably, with timetable capacity limited – pressures that have been exacerbated by the pandemic – it can find itself squeezed out by other priorities. In 2021, the All-Party Parliamentary Group on Financial Education for Young People concluded that the current delivery of financial education across the UK was ‘patchy’.
What young people think
Young people seem to agree. The London Institute of Banking and Finance surveyed more than 2,000 15–18 year olds across the UK for its 2021/22 Young Persons Money Index. The survey found that 81% said that they worry about money, and 67% said that they had become more anxious about money as a result of Covid. Of those surveyed, 72% said they wanted to learn more about money and finance in school with just 15% citing school as their main source of financial education. Instead, many of these young people are learning about money at home: 56% said their parents were their main source of financial knowledge and understanding. That number rises to 81% when those who say they are self-taught is included. These findings raise a number of challenges given that more than a third of adults in the UK say they do not feel confident about managing money, and around a fifth rarely or never save.
In 2021 the importance of financial education was highlighted in the new UK Strategy for Financial Wellbeing, developed by the Money and Pensions Service, an arms-length government body. Its goal is to see an additional two million children and young people get a meaningful financial education by 2030, up from 4.8 million to 6.8 million. This is measured by surveys of young people which ask them to recall if they had financial education at school they considered useful and/or their parents gave them regular money, set rules about money and give them responsibility for spending decisions.
The strategy sets out a number of changes, including giving more teachers the confidence, skills and knowledge to teach financial education; and schools delivering more memorable financial education to groups of children of different ages. But, consistent with the survey findings mentioned above, there is also a recognition that much financial education happens outside the classroom. The strategy seeks to find ways for more children to get experience of and responsibility for managing money at home; and calls for extra help for vulnerable children – especially care-experienced young people, young carers, and those with disabilities.
There is no shortage of online resources available to support young people directly, or the delivery of financial education in schools. Many private sector organisations, including banks and building societies, have developed their own offerings, with well-known examples including Barclays Life Skills and NatWest MoneySense. Charities such as MyBnk offer lesson plans covering topics such as saving and budgeting, for different age groups ranging from 2 to 25.
Here at the Bank of England we have developed two sets of resources covering both financial literacy and introducing pupils to economic concepts, and how they can help young people to make better-informed financial decisions. These have proved very successful: the Money & Me resources for primary schools, developed in partnership with the children’s comic Beano and the teachers’ online resource platform TES, have been downloaded more than 140,000 times. And EconoMe, our secondary school resource, has been used by around 50% of state-funded schools.
Despite the plethora of resources available online, the pandemic highlighted the digital divide impacting the most financially vulnerable households. For example, one in five children learning at home were not able to access an appropriate device ie a laptop or desktop. It is therefore understandable that the focus of financial education shifts to school delivery. But provision in classrooms is not uniform, reflecting a number of challenges.
A recent Teacher Tapp survey commissioned by the Bank of England suggests a number of reasons for this, including a lack of confidence in delivering the topic and a lack of resources, but almost two thirds of teachers cited a lack of dedicated time in the timetable for delivery (Chart 1).
Chart 1: Nearly two thirds of teachers cite a lack of time on the timetable as the biggest potential obstacle to creating a financial education programme
Challenges to financial education in schools
- Source: Teacher Tapp survey of 6,694 teachers on 19 February 2022. Teacher Tapp is a daily survey app that asks over 7,000 teachers questions each day and reweights the results to make them representative.
The results point to several areas that could be improved, including the provision of training opportunities for teachers and more effective signposting of resources across the sector. But overwhelmingly the key issue is time. As pressure on the delivery of core curriculum subjects continues to grow any time for non-statutory subjects is likely to decrease further. But does the changing financial education landscape provide an opportunity for us to rethink the way we approach the topic in schools?
Financial education across the curriculum
While it remains a cornerstone of the PSHE programme, there is increasing agreement that the topics, debates and activities central to a financial education programme underpin a far greater number of academic subjects. Although the link with maths is evident, the delivery of the curriculum within a financial education context is not widespread, and is now the focus of the Education Endowment Fund’s Maths in Context randomised control trial. The trial builds on the results of an earlier study commissioned through the London Schools Excellence Fund (London Lead Teachers in Financial Education project), which found the delivery of maths using a greater financial context led to significantly improved attainment across 26 London schools – an 18 percentage point difference between the test group and the control group in post assessments.
Attainment in GCSE mathematics is not only fundamental to post-16 progress, but also a subject that has one of the highest marginal returns by subject, with a one-grade improvement associated with a discounted return of £14,500 in lifetime earnings (compared with English at £7,300). In the 2021 summer exam series JCQ data shows the number of pupils obtaining a level 7–4 (A–C) pass in maths was 69%. For those pupils narrowly missing level 4, an 18 percentage point difference could make a considerable difference to their achievement, progression and lifetime earnings. And the additional skills gained through the financial education context could also help them make more informed choices about the way they spend those additional earnings. The results of the Maths in Context trial are due for publication later this year.
More broadly, the theme of digitalisation has clear overlap with the ICT curriculum, and in Scotland, there are elements of financial education delivered across a range of secondary subjects, including learning for life and work, modern languages and music.
Russell Winnard, Chief Operating Officer of Young Money, is a keen advocate of the cross-curricular approach, telling us: ‘Connecting money to other curriculum areas is really important… I would challenge anyone to not be able to find a connection between money and any subject taught in schools. In fact, the very best financial education lesson I have ever observed was in a drama lesson!’.
Post-pandemic the pressure on non-core subjects such as PSHE/PSE and Citizenship is even greater as they compete for space on the timetable and the content they are required to cover increases.footnote  In the face of such a scarcity of time and other resources, teachers are increasingly facing the type of trade-offs that would make an illuminating example for any A‑Level economics lesson.
But schools are amazing places and teachers are highly skilled professionals. Classrooms today are not only places of teaching and learning, they are also hubs of research and innovation. Over 70% of secondary schools now use the Education Endowment Foundation’s Teaching and Learning Toolkit to inform decisions about curriculum and pedagogy and over 1.3 million children and young people have been involved in their research programme to identify ‘what works’ in education.
The development and expansion of the Research Schools Network further reflects the desire for schools to engage with evidence, encourage innovation and trial new curriculum approaches. Could this present an opportunity to move away from the subject-specific delivery of financial education and introduce the content across a broader range of curriculum areas? Does the changing financial landscape present an opportunity to address a long-standing challenge? For example, an English language lesson debating the advantages and disadvantages of digital currencies clearly meets the three assessment objectives for the spoken language component of the GCSE qualification in England.
Across every curriculum there is a focus on building upon the foundations of prior learning and using a relatable real-world context. This is essential to achieving the broadest aim of preparing pupils for the ‘opportunities, responsibilities and experiences of later life’. The cumulative effect of a cross-curricular approach to financial education could therefore boost students understanding and confidence and be particularly effective at engaging young people who might struggle with or not enjoy a more traditional, single-subject approach.
The role of cash in financial education
The first time most children encounter any form of financial education, either in the home or the classroom, it almost certainly involves cash. Whether in the form of coins or notes, cash is a key tool for parents and teachers to use when explaining the value of money and importance of budgeting or providing the framework for understanding numbers, counting and place value.
Today, it’s more likely that parents will pay for the weekly grocery shop using a card, mobile phone, or even their watch ahead of cash. As set out in this Quarterly Bulletin article from December 2020 while cash remains an important part of the UK economy, its use has declined sharply. This trend was accelerated during the Covid pandemic when a number of factors converged to encourage people to use alternative forms of payment. The most recent data shows that, in 2020 alone, cash usage in the UK fell by some 35%.
In many ways young people might be regarded as the ones we should be least concerned about when it comes to the transition away from cash and towards more digital transactions. School dinner halls are often these days cashless environments, and it’s likely that a bag of chips from the shop outside can be paid for by simply showing the shop assistant your mobile phone. But pause for a moment to think about what the changed relationship with money means for the way we learn about finances.
In the classroom setting alone, money plays an important part in the very earliest stages of the curriculum. For example, at Key Stage One in England, pupils use coins to learn about the very basics of adding and subtracting. Part of the appeal of this approach is that it provides an important real-life context for learning, which helps to make maths immediately seem important and useful.
But if coins (and notes) no longer form part of the wider cultural experience there is a risk this impact is diminished, teachers consider whether there are more relatable pedagogies, and the visibility of money further decreases.
Potentially the engagement with cash, or money, which provides the foundations of financial education in the early years, becomes less impactful, less widespread or both. That, of course, has consequences for the broader financial education agenda and the longstanding efforts of campaigners who believe there should be much more financial education in schools, not less. At a time when our relationship with money is changing, and there are new opportunities and risks to navigate, many argue that it makes the need for meaningful financial education even more pressing.
Financial education in a digital age
The socio-economic context
There is little doubt among teachers and parents that financial capability can be a highly effective tool in helping young people navigate key life transitions and support good decision-making. And navigating that terrain is likely to become ever more complex in a digital age. The benefits of financial capability in this context extend beyond the ability to deal with day-to-day financial matters, to employment prospects, mental health and self-confidence.
A recurrent theme of the research surrounding financial education is that vulnerable children and those from disadvantaged backgrounds would benefit the most from high quality financial education. This is highlighted by a recent UCL working paper which used parent-child linked survey data from 3,745 families. The study identified ‘sizable socio-economic inequalities in young people’s financial capabilities, aspects of their mindset and their financial behaviours’. It also observed ‘15 year olds from disadvantaged backgrounds having similar financial skills to an 11 year old from an affluent background’.
Sharon Davies, Chief Executive of the charity Young Enterprise, is convinced of the links between financial capability and social mobility. She argues that receiving a financial education at an early age has the potential to significantly impact the future life chances of young people from lower socio-economic backgrounds including, for example, those in care.
‘Research shows 76% of schools with children most in need of financial education are in more deprived areas. Providing these young people with the knowledge, skills and attitudes to make more informed financial decisions could enable higher earnings, ability to save for future goals and ultimately create positive change in their lives,’ she said.
The Money and Pensions Service now runs an annual campaign, Talk Money Week, as a way of promoting open, honest conversations about money in the home, workplace and at school. The aim is to encourage discussion around the way we manage money – and a key focus is enabling children and young people to develop good habits for life. Those good habits are likely to include saving and budgeting.
Do children need physical money?
Which brings us back to the role of cash. More than a fifth of parents now give their children pocket money via bank transfer rather than in cash, according to Barclays research published in January 2022. But does this reduce the visibility of saving money, eg in a piggy bank, and shift the responsibility from the child to the adult? And could this lead to fewer opportunities for parents and children to discuss issues around money? With evidence that receiving pocket money as a child can positively impact attitudes towards savings and money management for life, the effects of this could be significant.
Conversely, the transition away from receiving pocket money in cash can provide some additional opportunities for learning, for example through pocket money apps. These offer an opportunity for younger children to interact with money in a more sophisticated way. For example, whereas a traditional money box is purely somewhere safe to store money when you are saving for something, these apps offer a chance to earn money through interest and there is a learning opportunity attached to that.
Other approaches are being developed which use gamification to engage children, with opportunities to develop financial literacy embedded in the narrative. However, the growth of fintech products for children does not come without its risks. For a start, most of them cost money, raising further questions about how to ensure that children from less affluent backgrounds are not deprived of the opportunities to access these learning tools. With more sophisticated apps for older children, there are other risks to consider. These include being exposed to financial misinformation on social media; being encouraged to buy and sell in cryptoassets; and the creation of a digital footprint that may be used to their disadvantage in future.
Providers of financial education resources for schools are also responding to these challenges with new and updated materials. For example, the Council for the Curriculum, Examinations and Assessment has developed a set of Key Stage 3 resources focused on apps, banking and money, each aligned to a different part of the national curriculum. The money resource has a focus on how payments and the exchange of money is changing in a digital world. Questions pupils are encouraged to discuss include, ‘Can you think of any risks involved in using a mobile wallet (app) for payments?’
Similarly, in 2020 the Bank added a fourth lesson to our econoME resource, which focused on ‘saving, borrowing and protecting my money’ – this included case studies exploring different types of financial fraud. For primary children, the Money and Me ‘lenders and spenders’ activity encourages children to look at a range of loan products and compare their overall value, while ‘scammer detected’ focuses on different types of fraud and what to look out for.
Financial education: where next?
As the UK’s central Bank we are committed to promoting wider understanding of the work we do and financial education is a key part of this. The questions we pose around financial education in many ways reflects our own shift in approach to the topic. We are trialling new approaches to engage young people with our work both in terms of the style of content we produce (The Bank of England and Beano, who would have guessed?) and the range of curriculum subjects it supports. We hope to push this further by commissioning research to contribute to the emerging evidence base around that topic, which could lead to fundamental change in classrooms across the UK.
We are also exploring how we can use our upcoming ‘popular economics’ book ‘Can’t We Just Print More Money’ to stimulate the discussion of basic economic ideas across a range of subjects. Encouraging young people to explore key ideas not only increases their awareness of the topic, but can also help them to develop important skills including language analysis and critical thinking.
We hope that by generating more understanding around the work of the Bank, and the decisions we make, that we can encourage young people to think more about the financial decisions they make too. It’s the kind of skill that is likely to prove valuable to them for life.
Quote from Money and Pensions Service.
Learning during the pandemic: review of research from England, see Conclusion (page 67).