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Last Updated: Wednesday, 26 March, 2003, 09:27 GMT
Providing a financial education
MONEY TALK
By Ron Sandler
Chairman of the Personal Finance Education Group

Money Talk with Ron Sandler
The former Lloyds of London chief reviewed the UK's savings industry last summer at the request of the Chancellor. Now he is helping to educate children in personal finance.

Last summer I called for greater investment in educating consumers about financial products.

But simply drawing attention to the need to upgrade standards of financial literacy in this country is not enough.

We need to go into schools up and down the country and teach children about how money works.

Creating successive generations of financially aware people and ultimately responsible citizens will bring enormous benefits both to the industry and society.

I recently agreed to become chairman of the Personal Finance Education Group (PFEG) because I believe the delivery of personal finance education in schools has to be at the heart of any sustained programme to improve financial literacy standards.

Everyone needs financial skills, whatever their background, and the group is doing important work in supporting activities for all age groups from children entering reception classes and on until they leave school.

Young people need to understand that there are groups of people within our society who may experience financial activity in different ways

Although there are some excellent resources available to teach personal finance, particularly for the 11 to 18 age group, there is very little that addresses how different cultures view the financial world.

The UK population is increasingly embracing diverse cultures and people will inevitably encounter these differences, both at home and abroad whilst on holiday, for example.

'Pardner'

Young people need to understand that there are groups of people within our society who may experience financial activity in different ways, and there are choices open to all young people in how they deal with financial decisions.

When African Caribbean people came to the UK in the 1950s they brought with them a custom called 'pardner', a community-based approach to saving and borrowing.

By starting at this age, they are able to develop a range of financial skills that they will need as they mature and prepare for life after school
'Pardner' is practised in the UK amongst groups of friends and family members, and completely outside the banking system.

Another example is where Islamic law prohibits giving or receiving interest, so young people can face a dilemma if they need to take a loan to pay for university, or later on if they wish to buy a house.

In another scenario, we can explore the tradition in Indian families, for example, where children provide for and look after their parents in their retirement.

We can examine how this differs from mainstream assumptions that in order to provide for one's own retirement, we need to put money aside into a pension.

Young Mums

It is also important to address the needs of young people, who have perhaps slipped out of mainstream schools, but equally require, and even more to some degree, guidance on financial matters.

PFEG is reaching this group as part of its flagship project, Excellence and Access, and has been working with Pupil Referral Units and Young Mums' Units.

Traditional teaching methods have to be tailored to suit their needs.

Awareness of cultural differences is as relevant to young people as to the industry
For example, with the Pupil Referral Unit, the advisors involved have found that the best way of engaging the boys is to focus on life after school, and the development of practical budgeting skills for accommodation and living costs.

A programme was devised where the boys researched the cost of local accommodation, matching what they wanted with what they could afford.

On a theoretical budget of 2,000, they had to plan the best way to furnish it. They also visited a supermarket to investigate the cost of food, resulting in practical cooking and eating session at the Unit.

Another interesting piece of work took place at a Midlands school for autistic pupils on developing independent living skills.

Fourteen-year olds have opened bank accounts within the school to help them learn about regular savings and money management.

By starting at this age, they are able to develop a range of financial skills that they will need as they mature and prepare for life after school.

An equally important aspect of this has been the interaction with adults from outside the school - helping to develop their communication skills in social situations.

Awareness of cultural differences is as relevant to young people as to the industry, and I hope it will contribute towards greater financial inclusion and harmony in society.

Personal Finance Education Group (PFEG) was created in 1996 to promote personal finance education. It is supported by the Financial Services Authority, the financial services industry and government departments.


SEE ALSO:
Reading the stock market
19 Mar 03  |  Business
Tackling the pension crisis
12 Mar 03  |  Business
Bank code has 'too many loopholes'
26 Feb 03  |  Business


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