Financial Word – Education

Lucian Camp doubts the value of teaching financial services to children.
Obviously it’s a bit of a waste of time looking for answers to problems that were solved long ago. Manufacturers of tin-openers, say, or hair-brushes, would be puzzled to hear I was beating my brains out trying to find ways to get at my baked beans and tomato soup, or to arrange what’s left of my hair in some semblance of order.
It may well be that this financial education thing we keep hearing so much about falls into the same category. A lot of very brainy people have given it a lot of thought. There’s at least one quango, the oddly named PFEG, whose role in life is to be The Group that sets the pace in Personal Finance Education. And, more than this, a good deal of financial education has been delivered in classrooms for a good many years, using materials provided and sponsored by big institutions like NatWest and Prudential.
I’m painfully ignorant of the detail of all these initiatives and activities, and as a result I’m free to speculate in an ignorant kind of way about the issues and challenges they face.
These are many. Firstly, and most obviously, is there any reason to imagine that personal finance will be the one subject studied at school that people then remember into their adult lives? Given that, these days, average first-time mortgage borrowers are thirty-four years old, they’ll have to keep their classroom learnings in mind for about twenty years. If they remember as much about fixed rates and yield curves as I do about, say, photosynthesis and the Hundred Years War, then God help them. I seem to remember that the former requires water and sunlight, and the latter lasted 116 years, unless of course it was the other way round. I certainly wouldn’t want to make big financial decisions in my adult life on the basis of such hazy recollections.
Secondly, when you hear that something like 50% of schoolchildren are basically innumerate, you do rather wonder how they’re going to absorb the sessions on how to calculate compound rates of return or the benefits of pound cost averaging. Or, come to think about it, the difference between EARs and APRs, which I must say is a question that even I can’t answer – although I’ve written millions of words on the subject.
Thirdly, it seems necessary to address a frighteningly-broad range of financial needs. Whilst the high-end trustafarians want to know about hedge funds and currency options, kids at the opposite extreme need to know whether 800% APR is an unreasonable rate to pay for a doorstep loan. What’s more, in these socially-mobile times, today’s trustafarian could be tomorrow’s Provident Financial customer, and, probably, now and then, vice versa. Does that mean you need to cover all the ends of the market, so to speak, with all the children? I suspect it does.
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