“Why don’t schools teach personal finance?” is a question most of us will have heard at some point in our adult lives especially for those who have faced financial hardships which could have been avoided with a higher degree of financial literacy.
Most UK schools don’t teach personal finance as it isn’t part of the national curriculum determined by the government. A cynic may suggest that avoiding this topic maintains an information gap between predatory actors and the uninformed general public which is a very profitable industry.
For answers to all of the questions you may have been asking yourself about why schools refuse to teach helpful life skills like personal finance and basic financial literacy, read on below.
Why don’t schools teach personal finance?
There are a number of reasons why schools don’t teach personal finance including a lack of financially astute teaching professionals, a vested interest to prevent the majority of the population from becoming financially savvy and how teaching personal finance can be difficult to frame in a child-friendly way.
Most public schools in the UK have their curriculum dictated by the national curriculum set by the government. The national curriculum does not contain a requirement to teach personal finance, financial literacy or wider ‘life skills’. The focus of the national curriculum is the traditional subjects that are deemed to provide students with a basic level of education which will enable them to learn more practical skills independently later in life.
A more cynical argument for why personal finance is not taught in schools is that keeping the majority of the population financially ignorant is a very profitable endeavour. Anybody with any knowledge about personal finance will know how damaging consumer, high-interest debt can be and why it’s best avoided at all costs.
Per this article “the UKs total interest payments on personal debt over a 12-month period would have been £44,454 million” which goes to show why companies who stand to benefit from consumer debt and the related staggering levels of interest may have a vested interest in keeping the general public financially ignorant.
Taking this further, the entire UK economy rests on the model whereby the majority of working-age people are gainfully employed between the ages of 20 and 65, contributing tax and national insurance steadily over time.
Those interested in personal finance and the explosion of the related Financial Independence, Retire Early movement tackles this assumption head-on, encouraging people to live more frugally and reduce consumerist tendencies.
Clearly, big companies who benefit from a consumerism orientated population have the influence and financial power to lobby governments into decisions that maintain the status quo and their bottom-lines.
Why don’t schools teach you about investing?
Investing is not part of the national curriculum so is not taught in most UK schools. The truth is most adults in the UK still don’t invest their money and due to this general apathy, the will for schools to teach investing is just not there. It’s very difficult to get those who are skilled investors into teaching positions.
The UK population would unequivocally benefit from learning how to invest on an individual basis. The facts are very clear, stock market investing is one of the best wealth-building techniques available to the public.
The sad truth is readers of this website who take an interest in investing are in a minority when it comes to the UK population as a whole. The unfortunate truth is most students, and many teachers, simply won’t have sufficient money spare to start investing.
Regular readers of this site will be familiar with my three-step guide to building wealth:
- Develop as large a surplus as possible between your income and expenses
- Invest this surplus wisely in low-cost index funds
- Avoid costly financial mistakes
For many people, developing any sort of positive surplus at all is very difficult, which makes step number 2 impossible.
Practically speaking, schools won’t hire investing-specialist teachers so the burden will fall to the general group of teachers to cover this lesson. If the teachers are representative of society as a whole, there is a good chance they simply aren’t comfortable teaching investing if they don’t fully understand it themselves.
Do any schools in the UK teach students about personal finance?
Some schools in the UK do teach their students about personal finance but as it is not a part of the national curriculum this is limited to private schools and academies. Even with the schools that do teach about personal finance, this tends to be an after-thought rather than a dedicated part of the wider curriculum.
So given most schools don’t teach personal finance at all and the ones that do don’t put a great deal of emphasis on it, what is the best way to teach children basic financial literacy?
Well, parents certainly bear some responsibility but this is problematic in itself. As discussed above, a significant proportion of the population are not financially savvy and fall for common financial traps like consumer debt or spending more than you can afford to.
If the financial education of children is left solely to parents, these bad habits prevalent throughout society will filter down through generations.
So what’s the alternative? Well, websites like this one or excellent resources like MoneySavingExpert help to bridge the gap, offering anybody who takes the time free, well-considered information.
Why do schools not teach ‘people skills’?
Schools don’t teach general life skills as they are designated as a place to give children a basic academic education whilst wider life skills are the remit of parents. Ultimately schools operating under the national curriculum teach what is determined as most essential by the government.
Many people can see the advantage of learning basic life skills like communication, cooking, home maintenance etc at school in place of some of the traditional subjects and it’s easy to see why. These common skills are far more applicable to people’s lives than most of what is taught in school.
Similarly, a greater emphasis could be placed on interpersonal skills like written and verbal communication, empathetic listening and influencing people. These core “soft skills” translate to pretty much every occupation and would likely ease some of societies continued tensions.
How would society change if schools taught personal finance?
If schools effectively taught personal finance, the average citizen would be more wealthy, capable of earning a higher income and therefore developing a larger surplus between income and expenses. As such, there would likely be more disposable income which would be beneficial for the wider economy.
It’s hard to know exactly how society would be impacted by a more financially literate society but one of the big advantages is that the knowledge gap between those who understand personal finance and those who don’t would shrink.
It is this knowledge gap that facilitates the exploitation of the financially illiterate by certain companies and keeps them trapped by things like consumer debt. Money worries are the cause of huge stress across the population, leading to broken marriages and even suicides in some cases.
Whilst it would be fanciful to suggest this could be prevented by schools teaching basic personal finance, it’s not unreasonable to say a percentage of the population would benefit from this to the extent where they may avoid costly financial mistakes and save themselves a lot of stress.
What would a school personal finance curriculum look like?
A personal finance curriculum should focus on teaching the essentials like budgeting, avoiding debt, investing (including the different asset classes available to invest in) and avoiding common financial traps people fall into. It will be crucial to pitch the lessons in a way that keeps them interactive so the students take the lessons on board for adult life.
I would include the below content in a personal finance curriculum:
- Budgeting
- How to cut your expenses
- How to increase your income
- How to invest your money
- The different assets you can invest in
- The products you can invest via in the UK – ISAs, SIPPs etc
- Inflation and it’s impacts
- Basic tax and accounting
- Banking
- The definition of financial independence
- Pensions
- Mortgages and acceptable debt
- Debt to be avoided
- Common financial mistakes and how to avoid them
Why don’t schools teach students about accounting?
Most schools don’t directly teach students accounting despite it being an incredibly useful skill. Schools aim to provide a basic, well-rounded education which enables students to progress into their desired field (including accounting) in the future. Specififc knowledge and skills, like accounting, can be learnt after the core school years.
As always, please remember I am an Accountant, but not your Accountant. In this post (and all of my others) I share information and oftentimes give anecdotes about what has worked well for me. However, I do not know your personal financial situation and so do not offer individual financial advice. If you are unsure of a particular financial subject, please hire a qualified financial advisor to guide you.
This article has been written by Luke Girling, ACA – a qualified Accountant and personal finance enthusiast in the UK. Please visit my ‘About‘ page for more information. To verify my ACA credentials – please search for my name at the ICAEW member finder. Please comment below or contact me here to get in touch with questions or ideas for future posts.