Money: Wising up today's teenagers

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The Independent Culture
Wising up today's teenagers

John Andrew reports on an initiative to give school leavers some financial know-how

Some tough questions were being asked at the stock-exchange last month at the final for the ProShare national investment programme, which attracted entries from some 1,400 schools around the UK.

The teams had participated in a series of tasks, including creating an imaginary pounds 50,000 portfolio. There was also a Liffe challenge, where decisions had to be made on buying and selling futures and options.

The five teams of finalists faced a business and finance quiz and a challenge involving investment decisions, in which they looked at factors that cause share price fluctuations. They also gave detailed presentations. The competition was judged by a panel of experts from finance and education backgrounds.

Gill Nott, ProShare's chief executive, commented, "We were impressed with the standard of the entries to this year's competition, and in particular with the teams that made it to the final ... the competition is an ideal opportunity for young people to learn about money management."

The winners were an all-girls team from Loreto College, Coleraine, Northern Ireland; second place was taken by an all-boys team from Firrhill High School, Edinburgh. In third place was Moseley School, Birmingham. Each of the winning schools received multimedia PCs and team members received individual cash prizes of pounds l00, pounds 75 and pounds 50.

Although all the teams that entered the competition had a high standard of knowledge, it is exceptional for young people to know about the stock market. There is a general lack of financial knowledge in the UK at all ages. Whereas the task of educating adults is a formidable one, if the topic of personal finance is introduced into the National Curriculum, the next generation may get the chance of a fuller understanding.

This must be built upon a solid foundation of budgeting and proceed to all aspects that will become essential in an adult's life, especially savings accounts, borrowing and, ultimately, financial planning. This last should include packaged products such as pensions, unit trusts and life cover as well as the stock market.

At the end of 1996 the Personal Finance Education Group (PFEG) was launched following extensive cross-industry discussions between those who believe that the young need to learn about personal finance. Its mission statement is: "To educate all young people about financial matters so that they are able to make independent and informed decisions about their personal finances and long-term security".

The benefits are obvious. School leavers will manage their financial matters better. A savings culture will develop. In the long term, young people will be better informed to make decisions about their financial future.

Research by the PFEG published last November revealed that 77 per cent of secondary school teachers considered personal finance education to be important. They regarded budgeting, saving, borrowing and tax as key areas of which pupils should be aware. However, lack of time was seen as the main barrier to teaching.

The research also revealed that confidence in teaching the subject is prohibitively low. Only one in 10 teachers, even in schools where some personal finance is taught, claimed to be very confident at teaching the subject. This does not bode well for the future.

The time constraint appears to be induced by the breadth of the National Curriculum and the focus on performance assessment. Any educational material seen to be additional is unlikely to be welcomed by teachers.

Last summer the University of Manchester Institute of Science and Technology (Umist) established a consumer finance education centre financed by the financial services industry. Its aim was to educate adults and young people on all aspects of personal finance. Sadly, the project never got off the ground. Disputes as to who should run the centre resulted in the resignations of those initially responsible for its establishment. The donations were returned to the sponsors.

This is a sad state of affairs. Millions are spent regulating the financial services industry, but nothing is being done to give consumers the ultimate protection - knowledge. Just imagine a Utopia where everyone has a good working knowledge of financial matters; there would then be no need for regulation.