MONEY, like sex and relationships, is now on the national curriculum. Personal finance is never likely to cause the same level of controversy as lessons about the birds and the bees. But there are growing worries over the effectiveness of the drive to create a new generation of savvy savers.

While compulsory financial education for five to 16-year-olds forms part of the citizenship maths, personal, social and health education and business studies sections of the national curriculum, schools can decide how the subject will be taught. This can result in pupils receiving very different levels of information. In some areas there is no teaching whatsoever as financial education is optional in Scottish schools and will not be introduced in Northern Ireland until 2006. It became compulsory in Wales last year.

Some schools admit their desire to instil the rudiments of good money management is at odds with the requirement to produce ever improving examination results and achieve a good position in the league tables. You can now take an AS-level-style exam in personal finance devised by the Institute of Financial Services, but can you spare the time if you wish to achieve A grades in more conventional subjects?

Mike White, head of mathematics at The Blue School, in Wells, Somerset, sums up the views of many teachers: “We are well aware of the problem of a real lack of understanding about personal finance, not just with pupils, but the public at large. The school is introducing more aspects of money management into maths classes — for example looking at the use of cheques, calculations of mobile phone tariffs, mortgages, shopping on the internet and the perils of credit cards. We feel such things are very important, but fighting against that, we are supposed to provide wonderful exam results.”

A lack of funding is another reason why personal finance education is not making progress in many schools. The Personal Finance Education Group (Pfeg) is at the forefront of the campaign, but it works with just 100 secondary schools. The body is itself supported by the Financial Services Authority (FSA), the City watchdog, Lloyds TSB, Prudential and other organisations, including the Department for Education and Skills, which provides just £12,000 a year. Wendy van den Hende, of Pfeg, says: “If we want to make sure every child receives financial education before they leave school it will cost considerably more than it does at the moment.”

The FSA has now assumed responsibility for ensuring that personal finance is taught, but has no idea how, or when, it will achieve this. Since funding is hard to find, many schools are grateful for teacher packs from financial services groups. Whether this material is sufficiently independent is another matter.

A limited range of personal finance topics are included in the maths syllabus. This can mean that the practical implications are not always clear to the students. A visit to a class of 14-year-olds at The Blue School showed that, while they understood percentages and could even correctly calculate how much monthly payments would be on a £65,000 mortgage at 4.9 per cent, spread over 25 years, many of them did not put their knowledge to practical use.

Lara Hodgson-Parnell, 14, admitted to ignoring the rates of interest when choosing her bank account. “I got it because it offered me a free CD.”

Three other children at the school, who are taking their mock GCSEs, have taken out NatWest Solo cards. Olly Carter, 15, and Josh Baker, 15, both opted for the Solo cards “because it’s free and I can use it instead of cash”.

Only Simon Jones, 15, had looked at the card’s reasonably generous interest rate of 3.35 per cent before making his decision.

Mark Dixon, a mathematics teacher at The Blue School, says: “Educating children to make the right financial choices is an issue beyond merely teaching them the mathematics of personal finance.

“People need to be able to differentiate — to see beyond the special offers. It is difficult for youngsters to see that you don’t get something for nothing. Yet how are young people expected to do that when most adults fail to do so? “If banks give them something free they are going to lose out somewhere. Yes, my pupils understand percentages and compound interest, but what they lack is the ability to plan for the long term.”

However, personal finance teaching can have direct benefits. Thanks to a project masterminded by the Severn Four Credit Union, nearly 300 children in five Bristol schools have saved more than £6,000 between them in the past year.

The Money Munchers scheme has been so popular that the credit union plans to visit secondary schools in north Bristol in some of the city’s poorest districts. Four other Bristol credit unions are also starting similar projects.

Young savers are visited at school once a week by Jan Clark, the credit union manager, who records their deposits; children can contribute anything, but most save 50p.

At Sea Mills Junior School, Bristol, children crowd round Ms Clark eager to see their coins translated into a neat line in their savings book. The youngsters are members of the credit union, which puts all deposits in savings accounts with Unity Trust Bank, an ethical savings institution. The children also get a taste of how they will have to manage their money later in life.

Withdrawals must be made by cheque, and once they start secondary school, they will be trusted to deposit their own weekly savings, using the PayPoint payment machines available in post offices and shops.

In one case at least, this early learning system is inculcating lessons of thrift. Ms Clark says: “A little boy at one school I visit told me he didn’t want to make any withdrawals and would use his savings to buy a house. But he said he wouldn’t live in the house as he wanted to rent it out.”

Footnotes

ProShare, the organisation that formerly promoted share ownership, now focuses on financial education. Its Student Investor scheme offers a free resource pack for teachers. Last year 850 schools took part in the 2004 Student Investor programme.

LINKS
Personal Finance Education Group: 0207-7833 2184, www.pfeg.org.uk.
Severn Four Credit Union: 0117-938 1439, www.severnfour.co.uk.