A third of millennials will never own their own home, personal debt continues to rise and the social pressure to consume has never been so intertwined in the fabric of our existence. Financial education became a statutory requirement of the British national curriculum for secondary schools in 2014, but what it means to the next generation is more than learning how much change to expect from £5 if you buy two apples and an orange.
Financial education, or ‘financial literacy’ is not just about pocket money and saving, or even income and outgoings. It is important that it’s much more than a maths lesson with a currency symbol.
Financial education can be defined in many ways and what makes someone have a good understanding or a bad understanding is completely subjective. Furthermore, people’s understanding of the way money works in the real world or what constitutes good money sense differs dramatically.
There are as many different models of financial education as there are people. While Robert Kiyosaki’s best-selling book, Rich Dad Poor Dad, tells you that building a property portfolio to create passive income is the way to go, a careers advisor suggests climbing the corporate ladder so your six figure salary can pay for the house, car and family of your dreams. A money saving magazine might discuss clipping coupons for your groceries and the benefits of ISAs, while an independent financial advisor advises you buy a commercial property for your pension fund and a digital nomad tells you to secure contracts that cover your flights and AirBnBs so you can see the world. Suddenly, the assumptions we have been making (and teaching) for years come into question. Is it right to get a mortgage? Is it right to save? Who is right? Is anyone right? Which should we teach kids about?
Deepak Taylor, a Dragon’s Den contestant, wrote a book, How To Live For Free, to address the problem of people not having enough time or money. It quickly shot up Amazon’s bestselling list and Taylor’s website, latestfreestuff.co.uk, updates offers every day. Is this money sense? Should we all be trying to live for free?
In Tim Ferriss’ book, 4 Hour Work Week, he talks of the new rich, described as those who abandon the deferred-life plan and create luxury lifestyles in the present using the currency of the new rich: time and mobility. This is an art and a science he refers to as lifestyle design. It alludes to the fact that not everyone wants to work longer hours for more money, hinting that the concept of financial success means different things to different people, as does financial security.
Many of the teachings from modern influencers in financial education address money in relation to value, not time. The literature teaches how you can create something of value, or spot a gap in the market, not how can you sell your time.
Individuals’ attitude towards money is equally, if not more, important than understanding the pounds and pence of it all. What any individual is comfortable with is entirely dependant on their upbringing, current situation and future aspirations, as well as the role models they have around them and what they do. But we can’t expect to know the risk profile of a primary school student, can we?
To further complicate the issue, financial understanding will differ wildly between generations. Concepts such as property crashes, cryptocurrency and angel investing, to name a few, mean that each generation’s experience of how (not) to make and spend money comes from a different foundation. Compare the baby boomers of today with the 8-year-old children in school. The huge growth of the gig economy and the prevalence of freelancing as an occupation