When Eileen Lawlor opened a bank account at the age of 16, she didn’t know how to write out a cheque. No one had thought it important enough to tell her.

Now Eileen is taking part in a project designed to reduce the number of children who leave school so unprepared. Every week she visits schools as part of the NatWest bank’s “Face 2 Face With Finance” scheme aimed at promoting “financial literacy”.

The initiative, launched in 1994, has reached more than 2,400 secondary schools in England and Wales, providing pupils with practical activities and discussions on areas of personal finance such as opening a bank account, using credit cards, taking out insurance, paying interest, saving and budgeting. The project has its own website - www.natwestf2f.com - carrying free resources and classroom materials for teachers to print out and copy. The site also features online quizzes.

Thomas More, a Roman Catholic comprehensive in Chelsea, west London, has been a partner in the scheme since summer 1998. On the day I visit, a class of 12-year-olds are studying banking.

“If you used all your money up in a fruit machine in the summer holidays, could your parents borrow money from the bank to replace it?” a boy asks hopefully. Banks could write off everyone’s debt, says another, “if they weren’t so greedy”. Another wants to know “how you stop burglars getting jobs in banks”.

While the pupils are superficially familiar with the language of money - “he’d put it on his Switch card” - it is clear from the question and answer session that much explaining remains to be done.

“Children see the process of money, from their parents and families, but they don’t really understand it,” says Eileen Lawlor. “We try to explain in simple terms how it works, so that teenagers who get credit cards will know they’re going to get a bill each month, and if they don’t pay it’s going to get bigger. Even filling in forms can be difficult for some young people.”

It might seem unfair to expect 12-year-olds to understand the intricacies of overdrafts and reading a bank statement, but in a few years’ time these youngsters will stat receiving mailings from credit card companies and banks. And, for many children, if schools don’t provide guidance, no one will.

Andy McGregor, Thomas More’s link teacher for the scheme, says there are powerful peer pressures on young people to be seen to be spending. The financial literacy lessons, he says, help pupils take a more mature approach to what they can afford.

Parents have welcomed the scheme, he says, not least because they are on the receiving end of the pressure to provide children with spending money. “And many parents don’t feel confident themselves in giving advice about money,” he adds. “If children can be taught about money from an early age, we can develop a more complex understanding as the programme develops. These young people will soon be earning money, and they need to know how to handle it.”

Each of the school’s year groups takes part in lessons that cover topics such as basic banking, credit worthiness and borrowing, setting up a small business and preparing to budget on a student loan.

If this all sounds a little too much like training the young to be conscientious bank customers, the evidence suggests that such advice is badly needed, and that financial illiteracy can be a serious form of social exclusion.

The term “financial exclusion” is now used to describe the large numbers of people in Britain who do not use or have access to financial services, such as a bank account, insurance or affordable credit. Often living in high-crime areas, where loan sharks provide the cash advances, families without basic banking facilities are left vulnerable to debt and violence. Social research body the Joseph Rowntree Foundation says more than one million households in the UK have no bank account.

There has also been a sharp rise in consumer debt, with growing numbers of young people getting into difficulty. In 1999, the National Association of Citizens Advice Bureaux dealt with an 18 per cent rise - 900,000 new cases - in debt problems involving credit cards, store cards and loans. The NACAB reports that many problems have been caused by people entering into financial arrangements that they didn’t understand.

Each of these debt cases will have an emotional as well as financial cost for those involved. Eileen Lawlor, who previously worked as a debt adviser for NatWest, hopes the bank’s project will help to prevent at least some young people from learning their financial lessons the hard way.