Personal finance education to be made compulsory

Schools will have to teach primary and secondary school children how to manage their money from September 2011.

This is something MoneySavingExpert.com has long campaigned for to help reduce the current £1.5 trillion of debt we owe as consumers.

Children and schools secretary Ed Balls has also asked the site's founder Martin Lewis to discuss the type of personal finance education required (see the Teen Cash Class guide).

Martin says: "We're a nation with over a trillion pounds of debt and we need to break the cycle, yet we're predominantly debt illiterate. There have been calls for responsible lending, yet just as important is responsible borrowing.

"While it may be too late for many adults, getting in and teaching children is crucial. We must be careful this isn't just about opening a bank account.

"It needs to stretch to teaching kids that a company's job is to make money, and they do it by marketing and advertising to manipulate our impulses."

Balls says: "Too many young people are leaving school without a basic understanding of how to manage their money sensibly and avoid the pitfalls of borrowing.

"So it's really important we teach our children about money matters like pensions, responsible saving and effective money management.

"We need to ensure all young people have the information they need to deal with to prepare them for the complexities of today's modern world."

Personal finance education is currently covered in the 'primary curriculum' but is not compulsory.

Teaching kids about money is one of six components of Westminster's statutory personal, social, health and economic (PSHE) programme. It also includes sex and health education.

Martin adds: "Ever since I stepped into a school in a TV experiment to see if I could teach twelve 15-year-olds to be Money Savers, I've been convinced of the urgent need for consumer finance education. 

"That day, the kids saved their parents £6,000. Kids desperately need money education, and next, with savings this big, we probably need the same for adults.

"The free Teen Cash Class guide I wrote subsequently has now been downloaded around a million times. Parents know we need to beak this cycle of poor money sense."My first lesson to any seven-year-old would be simple: take them into the supermarket and explain the reason there are sweets by the till is to encourage them to ask mummy or daddy to buy them, so the supermarket can get another bite on our cash."

Further reading/Key Links

Money management: Teen Cash Class, Student MoneySaving