The issue of young people falling into debt is rarely out of the news. There's been a worrying rise in those turning to charities for help to deal with payday lenders and loan sharks.
Of course, the most common type of debt is credit cards. A recent report by the charity StepChange says that a quarter of women under 25 and a third of men under 25 are the most likely age group to have this type of debt.
We've all heard about rent-to-own loans and doorstep lending which can double the original cost of an essential item. And in this increasingly online age, the need to be IT-savvy has never been more important.
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More and more young people are falling into problem debt. The Financial Conduct Authority estimates that half of all 18-25 year-olds show signs of financial vulnerability. While financial education has been part of the school curriculum – in Scotland since 2010 and in England since 2014 – there is limited evidence it is actually improving the financial lives of young people. So what can be done to make it more effective?
Research by the University of Edinburgh Business School, with the Young Money financial education charity, demonstrates that supporting post-16 teachers with professional training and high-quality teaching resources significantly improves the financial skills and behaviour of the students they teach. Some 120 schools took part in the study, while teachers in 60 schools took part in a one-day financial education training course provided by Young Money, and teachers in the other 60 schools acted as the control group.
Young adults generally find it hard to forecast and plan ahead with money, but after receiving financial education from the trained teachers the students were significantly more confident managing money than those whose teachers had not received the training. Some 59 per cent confidently knew how to use a budget planning tool to help them plan their spending and saving, compared with only 30 per cent before, and 54 per cent said they had either started to save or were saving more as a result.
Students were also much more confident about where to go for financial advice: over two-thirds of the students taught by trained teachers confidently knew what sources of advice were available, compared with just over one-third before receiving the financial education.
Students were also much more knowledgeable about a range of financial products, such as credit cards and loans, and could confidently explain them and critically assess different options.
The financial education also had a surprising impact on students’ behaviour on social media, leading to more than a quarter of students making changes to the personal information they share online as a result of a greater awareness of how to protect themselves from fraud and identity theft.
The key to these positive changes is improved teacher confidence and skillset arising from the training: almost all (98 per cent) teachers who received the training were confident in delivering financial education. Despite this, access to such training is not widely available and estimates suggest that only 17 per cent of secondary school teachers in the UK have actually received training in financial education.
Finding the time to take part in training can be an issue for busy teachers. As one teacher commented, schools are on the lookout for “anything that we don’t have to create from scratch ourselves because that’s time-consuming, and especially if you’re not an expert in it because it involves a lot more research”.
If we are serious about improving the financial lives of our young people through financial education, it needs to be properly supported in schools through access to good-quality training and teaching resources.
Professor Tina Harrison is personal chair of financial services marketing and consumption at the University of Edinburgh Business School