Our world revolves around money. We need it for bills, savings, retirement, student loans, rent, the list goes on. As such, knowing how to approach these challenges is an unbelievably important skill to master for all of us. As such, this article will look into financial literacy, analysing the current situation, and looking into methods to improve it.

What is financial literacy?

Financial literacy refers to the knowledge of, and ability to employ various instruments and tools in order to make effective and important financial decisions; to put it bluntly, knowing how to deal with money. This can include more than just good spending and saving habits, rather can also refer to any number of other financial concepts, from being able to utilise pensions and investments, knowing how to deal with debts and liabilities, as well as knowing how to prepare for big life events. It allows you to develop a sound relationship with money, giving you more confidence and stability. It has a number of benefits, including making you better prepared for emergencies, stopping you from making mistakes, and can make you better equipped to attain possible financial goals.

Current situation

Financial literacy is surprisingly low throughout the world. The Financial Industry Regulatory Authority, for instance, has found that 66% of Americans can be considered financially illiterate, whereas according to the OECD, in the G7 and G20, few countries rank highly for even basic measures of financial literacy. Wealthify and the Centre of Economics and Business Research recently did a UK poll, quizzing 2,250 people on their financial knowledge. They found that 73% of the country weren’t able get a pass, with most worryingly the younger generations scoring worst of all. A similar survey by Shepherds Friendly saw only 27% of respondents getting at least half of the survey questions right.

This indicates a worrying trend around the world, especially in the current climate with the effects of the cost-of-living crisis and inflation and the fallout from the covid pandemic. Coupling this with a general fear around investing in the British public, means that many have been losing hard-earned money, simply due to a lack of education around finances. Further, as of 2018, less than 50% of Brits could last three months without borrowing if they were to lose their main source of incomes, with 22% having less than £100 in savings and investments. These figures are worrying, especially in our current economic situation. Many are currently focussed on short-term expenses, resulting in them sacrificing longer-term opportunities, leading to less money for retirement and pensions. This leaves many vulnerable and exposed in our turbulent economic climate. Change here is necessary, to ensure people feel more confident making financial decisions and preparing for their futures.

To be clear here, it is difficult and undesirable to blame individuals themselves, rather you expect that financial education, being such an important topic in our day-to-day lives would have been taught in schools. Many question why it is so important to learn about Pythagoras’s Theorem and the Theory of Relativity, yet it is deemed irrelevant to learn about effective money management skills. This is especially worrying when coupled with the fact that many, on finishing school go on to university, a step which saddles them with an enormous amount of debt before they are truly able to fathom what impact this may have on their future.

Why isn’t it being taught in schools?

The best way to solve our financial literacy problem would be to include it as part of the school curriculum. It’s knowledge that people need from a young age. Many start working their first jobs or get their first bank account in their teenage years and may take on their first major debts at 17 or 18. Nevertheless, most teenagers are ill-equipped to take on these responsibilities. One should note that this isn’t because teenagers simply don’t care or don’t have any interest in learning about money. A 2021 survey by the London Institute of London and Finance found that around three-quarters of 15–18-year-olds said they wanted to learn more in school about money management. As such, why isn’t it being taught?

The critical factor is that personal finance actually is on the school curriculum, it just isn’t being taught effectively or at all. The Bank of England recently commissioned a survey of teachers investigating the challenges associated with financial education in the classroom. Around 63% explained that there simply wasn’t enough time on the timetable to teach it, while others mentioned lacking subject expertise or inadequate resources. Teachers have found themselves under enormous pressure, especially in the post-austerity era, to manage their curriculum and provide effective teaching to their pupils. Schools in England have faced their funding falling in real terms over the last decade, meaning they are often simply too constrained to make adequate changes and include personal finance into the curriculum. It often comes up in PSHE lessons, however, this teaching is often piecemeal and lacklustre. It is often seen as less of a priority, especially since it isn’t essential for major exams.

Adding to this, due to a poor history of personal finance education in the UK, another important factor is that when it is taught, teachers often don’t feel qualified to teach the subject due to not having had any financial education either. The addition of personal finance onto the curriculum happened in 2014, meaning that our teachers most likely will have gotten their information and knowledge from their own sources, whether through their family or the internet etc. This raises questions about the credibility of the lessons, as well as explaining why many teachers simply don’t feel comfortable being responsible for such an important topic.

What can be changed?

Financial education is fundamental and applicable to all of us. As mentioned, the most basic solution would be to teach it more actively in school. It is a subject that ultimately all of us need to and will need to engage with in adult life. The Parliamentary Education Committee has even launched an inquiry into the matter to look to improve this situation.

There are a number of obstacles with this. For many secondary schools, financial education is already a requirement, but many are falling short. While this is likely linked to other political factors, it is a situation that needs to be rectified. Even putting aside the cost-of-living crisis, issues such as the move to digital currency, scammers and cryptocurrencies put the younger generations especially at risk. Financial education is critical to make sure that newer generations are able to engage in monetary decision-making effectively and confidently. Nevertheless, unlocking personal finance in schools is the crucial path to take. Other routes, especially those who do their research online or via social media often find themselves at risk of poor quality or unreliable information.

There are short term fixes you can use, however, especially if you are already in adulthood and wish to work on your financial habits and practices. The best advice would be to seek alternative sources of education for yourself. This could include:

You want to surround yourself with people and resources that will aid in giving you a more in-depth understanding of the important topics that impact and relate to your situation.

What will the wider impact of improved financial literacy be?

When looking at the macroeconomic impact, prioritising financial education will have an incredibly beneficial impact on the UK economy, adding £200 billion by 2050. Instilling children with better monetary habits will set them up for later life, making them more conscious of the steps they need to take in adulthood.

  • Higher earning potential: Those who receive financial education statistically fare better and earn more. According to research from GoHenry, 77% of those earning between £55,001 and £65,000 annually had received some form of financial education, whereas 46% of those who didn’t receive any are earning £15,000 or less.
  • Better saving habits and less risk of debt: Those who received financial education tend to have better saving habits and are more financial stable than those who didn’t. Of the latter group, 79% said they had fallen behind on bills or council tax payments in the last month.
  • Bigger pensions: Those who received a financial education save on average 44% more in their pension pots than those who didn’t. This means the former group are much better set up for retirement.

Overall, the total impact would include adding around £6.98 billion to the UK economy every year, reducing unemployment by 8% and creating 123,000 jobs every year. This would have an incredibly positive impact both on a macro- and microeconomic scale.


Thus, financial education is incredibly lacking in this country, and throughout much of the world. It is an important skill that we all need to be able to master to promote our financial confidence and stability. As such, measures need to be taken to ensure we are taught about personal finance from a young age, equipping our next generations for their futures.

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