Is it worth investing in financial knowledge?

In 1758, Benjamin Franklin, a United States’ founding father, wrote one of the earliest publications on financial advice in an essay entitled ‘The Way to Wealth’. Franklin recognised the value of sound financial advice and understood the correlation between education and its significant return on any investment. Over 260 years later, his thoughts resonate just as much, and particularly given the complexity of finance and the uncertainties facing investors.

The topic of financial education can be a troubling one, not least as many of us didn’t receive any at school! Meanwhile, although it was introduced in the UK in 2014 as part of the national curriculum, the numbers still aren’t stacking up.

According to a recent report by the London Institute of Banking and Finance, 69% of young people between 15 and 18 years old in the UK receive most of their financial understanding from parents or their wider family. A further 17% are self-taught and just 8% state that they get the most knowledge from their school studies, despite 64% of the same students stating that they have studied personal finance at school.

The figure is better than the 29% that stated they had access to financial education in 2015, but what is the issue behind the low numbers? There are probably two high-level answers to that. The first is that only 4% are taught financial education as a separate subject. For the majority of students surveyed, the information is ‘only’ being taught as part of PSHE (personal, social, health and economics, although the economic element still isn’t required in statute), maths, economic and citizenship classes.

The second is that students were included that don’t attend state schools and so are much less likely to have access to financial education in school – in fact, 47% say they still don’t have any access. This is because the national curriculum only applies to state schools, and while it is often closely followed by academies, private schools don’t have to follow suit.

It’s not just the UK that seems to be struggling. In the US, of its 50 states, just 19 require students to take courses on economics/financial education, while a separate report published in 2017 stated that only Alabama, Missouri, Tennessee, Utah and Virginia were seen as offering an A-grade approach.  Meanwhile in Australia, while lessons in money management have also been in place since 2015, they are only now introducing the concepts of pension planning and taxation, and are (only) aiming for these topics to be taught in 50% of schools by 2024.

What is worrying for me is that although many people cite family and friends as the key people to talk with about their finances, many people still struggle to have any conversations. A recent survey by a high street bank shows this to be the case – in fact money was more of a taboo topic that sex, religion or politics.