RSS feedsFinance directors, one would hope, understand the value of money and all its complications. But what about their children? It is a question being posed by the ICAEW which, together with the Personal Finance Education Group (PFEG) and GE Money, is looking to improve financial literacy among teenagers.
The initiative involves the establishment of a database of consultants who can help schools provide their students with a real and practical understanding of money.
PFEG, an education charity, which helps teach personal finance awareness to school children, hopes to improve financial literacy further by constructing a database that will include consultants as well as people from all areas of the finance industry who, in turn, are willing to help schools provide their pupils with advice on the financial world.
According to Alastair Mathews, the director of policy at PFEG, the education sector is currently obsessed with getting students to pass exams rather than getting them to understand “what is useful in life”.
Financial awareness is not currently part of the national curriculum being taught in UK schools. However, in the mandatory subject of personal, social and health education (PSHE), where topics such as sex education are taught, schools have started to incorporate financial literacy as well as other ‘life’ educational topics. Students can ask questions regarding anything from mortgages and ISAs, to the pros and cons of credit cards. It is here that the PFEG initiative comes in and it is here where FDs can help.
The teacher conducting the PSHE class will be trained by one of the consultants in the PFEG database. It is hoped that they will be better equipped to educate the pupils to give them a better understanding of how to make informed financial decisions, as well as an insight into the business world.
Mathews believes there would be no point in putting FDs who have no teacher training in front of a classroom full of students. “It would just be a bad experience for everyone. We want the FD or finance professional to tutor the teachers so they can then educate the students,” he says.
The government is currently consulting with PFEG and drawing up white papers to help tackle the issue. Part of the solution could be to integrate financial arithmetic into the mathematics curriculum by 2008 – something which is already high on the agenda.
Joining the database would entail speaking with teachers and offering them a better understanding of what’s relevant and what’s not, in order to more effectively manage personal debt and personal finance. Companies can also sponsor the initiative in a separate, but equally useful, route that could ultimately go towards its corporate social responsibility report.
Currently, personal debt is estimated at about £1,200bn – an increase of 10.2% over the previous 12 months. The average household owes an estimated £7,754, according to statistics from Credit Action. Understanding how to deal with the problem is something that must be dealt with at its root, according to the ICAEW.
The PFEG initiative is just one example of how companies are getting more involved in education. The Deloitte-led initiative Skills4industry, for instance, has the backing of giants such as HSBC, Vodafone and Morgan Stanley. As a skills shortage is forcing many companies to outsource, it makes sense to invest in the education of tomorrow’s FDs.
