With more questions being raised about the financial knowledge of our young people, Sharon Davies writes that we should begin educating our children about money and finances at a much younger age in order to better prepare them for financial independence.

As students return home from university in the run up to Christmas, many will have been managing their personal finances for the first time ever, having to consider whether nights out socialising have left them with enough money to make it until the end of term. While this rite of passage is nothing new, there are increasing questions around whether we're doing enough to prepare our young people for this first step away from home and taste of independence.

The generation at university at the moment seem under more pressure from financial difficulties than any that preceded it. The Chancellor's recent budget announcement did not mention the rumours of a suspected lowering of the student loan repayment threshold, but students must be aware that this has been considered. A decision to reduce the student loan repayment threshold from £27,295 to £23,000 will put thousands of young people at greater risk of sinking into more debt and force them to begin repayments at a time when they may well be struggling to pay basic bills for rent, heating and food.

If we are to expect young people to understand the burdens of loan repayment, we need to do a better job at teaching financial education in schools from a younger age. We know that financial habits are formed from as young as 7, so it is imperative that we get financial education on the agenda in schools much earlier to prevent a debt crisis for young people later.

Recent research from economist Annamaria Lusardi showed that financial literacy amongst older adults is limited, and even worse amongst younger people who are more susceptible to trading-related scams and cryptocurrency frauds. Understanding the risks associated with working with money is crucial to avoiding such scams amongst young people.

Young people are heavily marketed to on social media with dangerous cryptocurrency offers, gambling platforms, and loot boxes on online gaming. There is also financial misinformation on social platforms which means young people could be getting the wrong advice. New platforms like Klarna have popped up and established themselves online in most major retailers very quickly. All of these new ways of paying for things have made it easier for young people to be more susceptible to getting into debt.

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Although the UK government recently announced the launch of the consultation to regulate the 'Buy Now Pay Later' industry, young people should still be taught the importance of not falling for credit schemes and how to manage their finances. Regulating the industry is a step in the right direction but use of these platforms cannot be learnt overnight without the right financial literacy.

A way to ensure that financial education is taught in the right way and engraved as a mindset for young people is by starting education much earlier in their lives. Only one in three primary school children currently receive any form of financial education, and only 48 per cent of those in secondary school despite being on the national curriculum. It's therefore no surprise 67 per cent of young people do not feel confident planning for their financial future. A study from the Money Advice Service confirms money habits and behaviours that will stick with us for life are formed by the age of 7.

In light of the pandemic recovery, the struggles that young people are going through now have highlighted that they need better financial education and planning skills to combat unexpected challenges like job losses and a changing employment field. We know that young people have shown resilience and an enterprising mindset to face some of the challenges of the last 18 months; we must now look to identify further ways that we can support them.

Young Enterprise works closely with educators and teachers to ensure the quality of our provision, but as different groups providing financial education, we can all do better to increase collaboration for the benefit of young people and educators.

More can be done outside of the classroom too. We also need to reach out to young people where they spend their time, like for example on social media, on Instagram or TikTok, and using relatable role models to appeal to them.

If we can increase the financial capability of young people, there's a real opportunity to make a contribution to social mobility. Focusing financial education on young people in underserved communities where barriers to social mobility is greatest will be really important, alongside working with educators in homes, schools and colleges.

We urge educators, business, government and civil society to work with us, to give young people the opportunity to learn about money and mindset from an earlier age both in and outside of school.

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