Now is the time to boost financial literacy

FT FLIC, the Financial Times’s charity to promote financial literacy, is now more than a year old. As cost of living pressures weigh down on populations around the world, its mission could not be more resonant. Early in 2020 we decided to be more ambitious in our charitable outreach than partnering as before with different NGOs and raising awareness of their work. The cause we chose addresses an issue that the financial world has both created and neglected.

Vast gaps in basic financial knowledge and understanding, estimated by the World Bank to afflict two-thirds of the global population, are compounding the financial pressures inflicted by high inflation. Boosting financial literacy levels can help relieve those pressures. It can also empower individuals to save, invest and found businesses.

The issue affects all strata of society. Celebrities who didn’t understand their own finances have been hoodwinked by unscrupulous hangers-on. Those on the lowest incomes may unwittingly be drawn into borrowing at ultra-high interest rates. Even professional financiers can make poor decisions about confusing mortgage products.

FLIC, the FT’s Financial Literacy and Inclusion Campaign, has been targeting groups that research has shown are most likely to benefit from a boost to financial literacy. These include women and young people, as well as a range of disenfranchised communities from gig workers to older people without access to digital services.

In its first year, FLIC has hosted a number of educational sessions for its target groups. It has also developed a programme of financial education for workers with unpredictable incomes, in partnership with the Association of British Insurers. But much of its work has focused on developing and delivering financial literacy education for school students.

In the UK, the absence of a committed curriculum means most young people leave school knowing more about baking and biology than about budgeting and borrowing. In England and Wales, for example, most financial education is supposed to happen within the PSHE curriculum. But this hodgepodge subject — covering sex, health and drugs — leaves little time to deliver meaningful financial information. PSHE is a subject often taught by non-specialists who may lack finance expertise themselves.

FLIC has developed its own curriculum of financial education material — aimed both at teachers and students. Several pilot programmes have taken place across the UK, and a whole-school pilot is scheduled to begin in February, with nationwide rollout via partner organisations later in 2023. It is up to date and engaging and will be freely available via the FLIC website.

The charity has also begun lobbying for change with ministers and MPs. FLIC firmly believes mandatory financial education — within the maths curriculum and beyond — is a crucial foundation for people’s ability to deal with money in later life. In the US, Next Gen Personal Finance, headed by FLIC donor Tim Ranzetta, has made a big difference with a state-by-state lobbying campaign of its own. Some 27 US states now require high schools to offer a personal finance course, though only 15 require students to take a financial literacy course to graduate.

Closer to the FT’s home, the Lord Mayor of London, Nicholas Lyons, has agreed to make financial literacy a theme of his one-year tenure as head of the governing body for the City of London. FLIC and the Financial Times are proud to join that initiative. We encourage readers to find out more, and contribute, here. And most importantly, to spread the word about the importance of financial literacy.

More articles on the FT Financial Literacy and Inclusion Campaign can be found here