The UK has an impressive 99% literacy rate, according to international studies. While this is worthy of praises I suspect the ‘financial literacy’ rate for the UK is just a fraction of this and the country is poorer as a result.
We have a population which is, seemingly, routinely scammed, cannot work out 15% of 100 and struggles to understand even the most basic rules of investing and saving.
When it comes to finance we are the dunce in the corner.
The CISI has generously funded the body with £2.5m from its own reserves and many industry professionals have equally generously volunteered to become founding trustees. I hope many more industry companies support the body and particularly its first focus in trying to improve financial literacy among disadvantaged young people.
Basic skills such as budgeting, saving for a rainy day and planning ahead for big items are all too often missing for young people who seem increasingly prone to short term lenders, credit cards and all manner of nonsense such as crypto currency and social media finfluencers (the bad ones, of which there are many).
Many Financial Planners may be wondering why this matters? To my mind, it’s simply the fact that a smarter, more financial literate population is good for all of us. More people with savings and investments will be more potential customers for Financial Planners and financial providers in the future.
It just is not right to concentrate only on the wealthy or better off and leave everybody else to the sharks.
A key place for financial literacy education, of course, is schools and here the Personal Finance Society does exceptional work too with its schools-focused My Personal Finance Skills programme which has for several years seen hundreds of planners spend time in schools teaching young people about money.
I know also that many planners have excellent links with local schools and willingly provide pro bono support to many individuals and schools.
All of this is good work but there is much more to do. Personal Finance skills should be an integral and essential part of the maths curriculum in schools; I never quite understand why adding up random numbers cannot be turned into adding up pounds and pence. Even small steps here will pay dividends.
But hats off to the CISI for its new campaign and decision to begin awarding grants to partner bodies to improve financial literacy. It’s a modest but significant step in the right direction and one day it will pay off.
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Kevin O’Donnell is editor of Financial Planning Today and has worked as a journalist and editor for over three decades.
