Financial literacy — learn now, enjoy later

In Britain there is a curious sense of pride in admitting that you suck at maths. Yet the consequences of poor numeracy skills are no joke when it comes to managing money.

The UK scores poorly on financial literacy. According to a study by the Financial Conduct Authority, half of the population has little confidence in making decisions related to money. Numerous studies link high levels of economic deprivation to low levels of financial understanding. The least proficient groups are low-income people, young people, women and ethnic minorities. For those whose budgets leave little room for error, a good financial decision could be transformative, a bad one catastrophic.

The Financial Times is today backing a new charity campaign to lobby for change. Unequal financial education was a problem before the pandemic, but the economic consequences of Covid-19 should galvanize a response from international policymakers.

The classroom is a good starting point. Although financial education is nominally on the UK’s national curriculum, it is rarely a priority, partly because there is no formal assessment or examination. Given the pressures on teaching time, one solution is to inject more practical financial problem solving into math lessons.

Even math-phobic students have a natural fascination with money in the context of their life aspirations and goals, as seen in the new wave of young investors drawn to “meme stocks” and cryptocurrencies. Regulators have previously expressed concern that too much financial “education” is being provided by bad actors on social media. Providing a better alternative in schools could solve both of these problems.

A solid, foundational knowledge would give students the confidence to tackle solving money-related issues as they progress through life, from student debt and buy now, pay later to retirement savings.

The FT Campaign for Financial Literacy and Inclusion

The Scottish curriculum is already taking a more practical approach and injecting financial literacy into the teaching of maths and social studies. Scottish students have the highest levels of financial capability in the UK, according to the government’s Money and Pensions Service.

Better communication is also needed. The broader financial sector should rethink product design and formulation. Research by the FT and Ipsos Mori found that just half of 3,000 respondents were able to correctly compare the costs of borrowing through credit cards or bank overdrafts, regardless of wealth, background ethnicity or gender.

Learning must continue beyond the classroom. Continuing education, where young people take their first real test of money and debt management, is a key area. Employers also have a role to play; Boosting financial literacy in the workplace makes sense, because that’s where lifetime savings are usually accumulated. As pension plans become less generous and employment becomes more precarious, these are skills people need to navigate their financial lives.

This news organization is keen to support positive change. The FT Financial Literacy and Inclusion campaign, a new charity backed by the FT, has been set up to educate and lobby for policy improvements. Where possible, he will engage FT readers and the wider financial sector to address shortcomings, first in the UK and then around the world.

Not all children will inherit wealth, nor the parental help and guidance that often comes with it. But rich or poor, higher standards of financial education can be a lasting legacy for everyone.


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