Catch them young

Finance directors, one would hope, understand the value of money and all its
complications. But what about their children? It is a question being posed by
the ICAEW which, together with the Personal Finance Education Group (PFEG) and
GE Money, is looking to improve financial literacy among teenagers.

The initiative involves the establishment of a database of consultants who
can help schools provide their students with a real and practical understanding
of money.

PFEG, an education charity, which helps teach personal finance awareness to
school children, hopes to improve financial literacy further by constructing a
database that will include consultants as well as people from all areas of the
finance industry who, in turn, are willing to help schools provide their pupils
with advice on the financial world.

According to Alastair Mathews, the director of policy at PFEG, the education
sector is currently obsessed with getting students to pass exams rather than
getting them to understand ‘what is useful in life’.

Financial awareness is not currently part of the national curriculum being
taught in UK schools. However, in the mandatory subject of personal, social and
health education (PSHE), where topics such as sex education are taught, schools
have started to incorporate financial literacy as well as other ‘life’
educational topics. Students can ask questions regarding anything from mortgages
and ISAs, to the pros and cons of credit cards. It is here that the PFEG
initiative comes in and it is here where FDs can help.

The teacher conducting the PSHE class will be trained by one of the
consultants in the PFEG database. It is hoped that they will be better equipped
to educate the pupils giving them a better understanding of how to make informed
financial decisions, as well as an insight into the business world.

Mathews believes there would be no point in putting FDs who have no teacher
training in front of a classroom full of students. ‘It would just be a bad
experience for everyone. We want the FD or finance professional to tutor the
teachers so they can then educate the students,’ he says.

The government is currently consulting with PFEG and drawing up white papers
to help tackle the issue. Part of the solution could be to integrate financial
arithmetic into the mathematics curriculum by 2008 – something which is already
high on the agenda.

Joining the database would entail speaking with teachers and offering them a
better understanding of what’s relevant and what’s not, in order to more
effectively manage personal debt and personal finance. Companies can also
sponsor the initiative in a separate, but equally useful, route that could
ultimately go towards its corporate social responsibility report.

Currently, personal debt is estimated at about £1,200bn – an increase of
10.2% over the previous 12 months. The average household owes an estimated
£7,754, according to statistics from Credit Action. Understanding how to deal
with the problem is something that must be dealt with at its root, according to
the ICAEW.

The PFEG initiative is just one example of how companies are getting more
involved in education.

The Deloitte-led initiative Skills4industry, for instance, has the backing of
giants such as HSBC, Vodafone and Morgan Stanley. As a skills shortage is
forcing many companies to outsource, it makes sense to invest in the education
of tomorrow’s FDs.

This article first appeared in the July/August edition of our sister
title Financial Director