The importance of financial literacy
In February 2023, the All Party Parliamentary Group (APPG) on Financial Education for Young People issued its latest report, titled: ‘Building Beyond Barriers: a roadmap for enhancing financial education in schools’. The report is damning.
Here are some excerpts:
- Across the UK, there are large numbers of young people who lack the knowledge, skills and behaviours to manage their money well.
- Lack of financial capability is an issue that is echoed across the population, with 45 per cent of adults saying they do not feel confident managing money … [they struggle to] build resilience against economic shocks and avoid falling victim to scams and bad debt.
- The negative consequences associated with poor financial capability are well known, including the impact this can have on an individual’s life chances as well as the effect it has on wellbeing.
We take these claims seriously at Headington. And I am here to tell you that financial literacy runs right throughout the School and your daughter has access to an incredible array of financial education.
But, if you’ll allow me, here’s some brief context to the report above.
Back in 2005 (before the 2007/08 financial crisis), the OECD acknowledged the importance of financial education in their own report, titled: ‘Recommendation on Principles and Good Practices for Financial Education and Awareness’. Then, in 2012, financial literacy was added to the PISA test. This is an OECD assessment, which measures the academic performance of 15-year-olds across the world every three years, in order to make international comparisons.
- PISA define ‘financial literacy’ as: knowledge and understanding of financial concepts and risks, as well as the skills and attitudes to apply such knowledge and understanding in order to make effective decisions across a range of financial contexts, to improve the financial well-being of individuals and society, and to enable participation in economic life.
For what it’s worth: Estonia, Finland and Canada came out on top of PISA’s financial literacy assessment. But, since the UK chooses not to participate in that element of the test, we have no definitive international comparative data about UK students’ performance. Nevertheless, whilst the Chancellor of the Exchequer is only too happy to reference the UK’s improved rankings in the PISA reading and writing tests in his recent Spring budget (“the UK has risen nearly 10 places in the global school league tables for maths and reading since 2015”), it is clear that there are several of his colleagues in the APPG that would welcome a greater focus on financial literacy.
What are we doing at Headington?
In my previous blog, I talked about the entrepreneurship pathway – a pathway that runs right from U3 to U6. Indeed, the L4 are about to get started with the annual £5 Challenge in the next few weeks. But, the real news story is the L5 Financial Education elective. Since September 22, we have run the ‘Award in Financial Education’ (AiFE) in conjunction with the London Institute for Banking and Finance. It is a one-year elective course that runs alongside the girls’ GCSE courses in L5. Assessed over two short exams of 45mins each, every single pupil in our inaugural cohort (24) recently passed their first Unit 1 exam. In early May, they will sit Unit 2.
As a teacher, I love this course. It is packed with real-world applications and opportunities for both research and discussion. This year, I have found myself talking about issues as varied as: interest rates, Ponzi schemes, inflation rates, payday loans, JSA, CCJs, NFTs, Cash ISAs v stocks and shares ISAs, the price of Prime energy drinks, stamp duty, council tax, Gamestop, cryptocurrencies, budgets, Klarna … the full spec is here. The girls clearly enjoy it too. For the Summer Term, the Economics Department has set up a new lunchtime club for L5 and U4 called ‘Investment Club’ just to keep up with demand. Here, the girls will learn how to read balance sheets and income statements from Companies House records and make stock market predictions.
Such is the popularity of finance-related courses at Headington, it is looking highly likely that more than 120 senior school students will be enrolled on a formal qualification around financial literacy in the next academic year 23/24; be it in L5 (AiFE), L6 (mini-MBA), or L6/U6 (A Levels in Economics and/or Business). We are meeting the OECD’s challenge of ‘improving the financial well-being of individuals’ and we are out-performing the APPG’s assessment regarding students’ ‘knowledge, skills and behaviours to manage their money well’. Financial literacy at Headington is healthy.
