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Oxbow lakes or basic financial literacy?

Following pensions awareness day (PAD), I found myself once again pondering the dilemma of the UK’s general lack of financial literacy. More importantly, what can be done about it.

Campaigns like PAD and the pensions bus are a fantastic way to help raise awareness of the need to save for life after work and highlight the many positives of saving in a pension. Tax relief, employer contributions, flexible options when you come to take your benefits; what’s not to like? Employers can piggy back on these public campaigns, using them as a great opportunity to remind their employees about the benefits of their own workplace pension scheme or financial wellbeing initiatives.

However, saving for retirement is just one of the many financial pressures we face. There are huge numbers of people who are saddled with debt or struggling to meet day-to-day living costs. How can we expect people to seriously consider how they will live comfortably in retirement, if they are weighed down with money worries today?

Earlier this year, at the REBA Leaders conference, I delivered a tutorial on ‘What does a fully-rounded financial wellness programme include?’ (if you missed it, you can watch it here). At the start of this session, I went ‘off script’ and had a small rant about oxbow lakes and a subject very close to my heart; the lack of proper financial education in schools. Quick background for context:

Who prompted the rant?

Government minister, Guy Opperman, parliamentary under-secretary for pensions and financial inclusion at the Department for Work and Pensions (DWP).

What did he do?

Nothing really. It doesn’t take much to get me going on this subject. He mentioned something about financial education for the young and the rest was history!

What is an oxbow lake?

Come on! GCSE (or O’level in my day – how old?!) geography teaches us that when a particularly meandering river continually erodes on one side of the bend and deposits on the other, eventually it can cut off a tight bend. The result is an isolated lake, that’s shaped like an oxbow.

Erm, what is an oxbow?

A big leather yoke in the shape of an upside-down ‘U’, which sits over the neck of an ox so that a plough can be attached.

OK, so what has all this got to do with financial wellbeing?

Here is the crux of my annoyance. How do I know how an oxbow lake is formed? How does my 16-year-old son also know this? Because we were both formally taught it at school. You see where this is going? Drumroll… this was my rant:

How come my 16-year-old son knows how an oxbow lake is formed but doesn’t know his @rse from his elbow when it comes to money? Why isn’t financial education properly taught in schools?

Some readers may well be thinking: “But, James, hasn’t this all changed? Didn’t the Department for Education finally add financial education to the curriculum?” Yes, they did. However, as a governor of a local school, I know that almost every secondary school was forced to become an academy a few years back. Guess what – academies set their own curriculum! Can you see the tricky issue here?

Financial education is not a compulsory or examined subject. It does not help schools get ‘good stats’. And, like people, schools are often struggling with limited budgets and resources. They can’t afford to do everything they’d like to and so have to focus their spend accordingly. So financial education remains wildly neglected. It is included in pastoral and enrichment lessons, which helps at a very low level, but is not formally taught.

Time for real-world maths?

I got a good grade in maths, and even took it a year early. Amongst other things, I learned how to measure the volume of a cylinder and balance a quadratic equation. I cannot recall ever needing to use that particular knowledge again since finishing my exams. Now, I’m not suggesting we shouldn’t learn those things. Far from it. But wouldn’t it have been super helpful if my maths classes had also explained the taxation system, the difference between gross and net pay, how to calculate income tax and National Insurance Contribution deductions, etc?

When we first start learning maths, teachers are brilliant at using real-life examples; Jonny went to the shop with £1, he spent 60p on sweets, how much change did he get? Perhaps we could continue this theme as the subject advances. Cumulative increases and decreases? Look at how mortgage interest works, or the value of compound growth in long-term savings vehicles such as individual savings accounts (ISAs) and pensions.

My driving passion is to help employers bring financial literacy and practical money management tips to their employees. Whenever I deliver a financial education workshop, employees unceasingly prove to me that they are desperate to learn how to manage their money more effectively. Likewise, when I’ve delivered similar sessions on a voluntary basis in schools, the pupils have been equally interested and keen to learn. The appetite is there, people just need the opportunity.

Of course, if financial education was delivered properly in schools, I might be out of a job. So maybe I should shut up quickly. Nay, say I! Educate our kids about money, now, in schools, and don’t worry about my future employment prospects.

P.S. Gizza job! (Yosser Hughes, Boys from the Black Stuff, aka Bernard Hill)

This article was first published with REBA on 12 September 2018

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