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Plotting a path for the young
How do we improve the financial knowledge and self-confidence of the young? Andrew Stone listens in as the experts confer.
Young people have been hit harder than most in the UK since the advent of the financial crisis in 2008. With high youth unemployment stretching their financial resources and the prospect of more expensive education options, young people need help understanding money and finance more than ever. New initiatives, including the forthcoming opt-out pension schemes, only add to the importance and urgency of the task of educating the next generation in money matters.
Improving the financial awareness of young people is important for a number of reasons, says Louise Macdonald, a board member of the Consumer Financial Education Body (CFEB) and chief executive of Young Scot. Giving young adults a better understanding of, and control over, their finances has a cascade of benefits beyond merely improving their financial outlook.
“We’ve researched the impact of giving young people control over their finances,” she says. “It allows them to plan things like housing, employment and travel but there’s also good evidence around its importance for mental health and wellbeing.”
To identify ways to improve the financial knowledge of 16-24 year olds, delegates from CFEB (soon to be renamed the Money Advice Service), the financial services industry, colleges and further education bodies, NGOs and the Scottish Government met at the Financial Education Partnership (FEP) organised Financial Horizons conference in January. They examined ways to build on initiatives already underway in Scotland.
The aim of these key stakeholders was to discuss the financial education landscape for young people within the framework being established in Scotland and to determine next steps among industry, government and the third sector.
Talks included insights from CFEB Chairman, Gerard Lemos, and from Macdonald on young people through the prism of social policy research. Spokespeople from the Scottish Government and CFEB outlined the factors and ideas driving policy, while representatives from Scotland’s colleges reported on the co-ordination between the colleges and Lloyds and Barclays Banks to deliver programmes on the ground.
After the presentations, the group split into seminar groups to consider a range of ideas, including:
• the best ways to reach young people
• the need to link help to specific financial issues
• the relative benefits of online versus face-to-face advice
• how to make advice relevant to young people.
The seminar groups also discussed the best mechanisms for delivering money advice.
According to Michael Royce, senior associate for young people at CFEB, the ultimate outcomes that organisations want to see from the conference include more cohesive strategies and programmes to make young people more able to take control of their own financial destiny. These cover fostering improved money handling skills, increased rates of saving and better financial decisions. The aim is to embed money management skills in all forms of education as well as extending this help to those outside mainstream education.
One of the most important means of achieving this, says Macdonald, is to ensure that the many groups with an interest in the financial awareness of young people work together on a well-defined strategy to avoid duplication of effort. “What I found really encouraging was the approach being taken between all the leading organisations, the sense of wanting to work together so we have a cohesive offering and can share expertise and maximise the work we are doing while minimising overlap.”
It is something the conference went a long way to achieving, she argues. “There was lots of desire to carry on collaborating and to plot a path to success for the young people of Scotland. I think they all saw the value of working together and the opportunity it gave them to compare notes and identify gaps in the financial education of young people in Scotland.”
It is more important than ever for interested organisations to collaborate and co-ordinate their actions closely while details of a new ’Financial Education Forum’ in Scotland are determined, says Val Bauckham, financial education manager at the Chartered Banker Institute.
The advantages of such close co-operation are clear, says Royce. Ultimately everyone benefits from helping young people make smarter financial decisions, and that includes the banks. “By making consumers young or old more informed and confident about the financial decisions they have to take, it will benefit the industry. It leads to fewer complaints and business will increase.”
Trailblazer in Europe
The FEP’s approach to the financial education of young people is emerging as a trailblazing model for others. The European Commission has awarded funding to enable the replication of the UK FEP model in other European countries on a two year pilot scheme, with the objective that further countries adopt the model thereafter.
The pilot schemes will be developed in Italy, Spain, Germany and Greece. Val Bauckham, who manages the FEP, says the money will go towards developing volunteer networks from the financial services industry and professional organisations in these countries and aims to reach at least 2,500 pupils initially. “Financial education has been identified as a priority by the European Commission and the aim is to adopt that model on a permanent, widespread basis.”
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