- Topics such as debt and overdrafts not adequately covered, say 18-21s
A quarter of young people leave secondary school without basic personal finance knowledge, reporting that they did not receive any financial education at all.
Of the current generation of 18-21 year olds, four million entered adulthood without being taught how to properly manage their finances according to a survey by Santander.
This comes despite financial education having become a part of the National Curriculum for secondary schools a decade ago in 2014.
The National Curriculum is only compulsory for schools maintained by councils, with academies, free schools and private schools not required to do so.
In practice, many of these schools do also provide teaching on personal finance and money management.
However, just 13 per cent of 18 -21s surveyed by Santander said the financial information they learned at school was applicable to their own finances.
They said that topics such as debt, overdrafts, loans and buy now pay later were not adequately covered in schools.
William Vereker, chair of Santander UK, said: ‘Young people’s understanding and effective management of money is essential in their own lives, but also for wider society and economic growth.
‘Empowering them with the knowledge and skills to develop a healthy, resilient relationship with money directly impacts the economic stability of the country, by reducing individual debt, instilling investment habits and encouraging entrepreneurship.’
As many as 79 per cent of young people have never created a budget, while 76 per cent haven’t paid a bill and 77 per cent haven’t set aside any money for unexpected expenses.
Vereker said: ‘Our research raises two significant concerns: firstly, that the current school curriculum does not always equip young people with the knowledge they need to plan and manage their financial futures.
‘Secondly, that this gap is leading young adults to potentially unreliable online resources for advice.
‘Banks have a critical opportunity to connect with young people by delivering accessible, engaging financial guidance tailored to their needs and preferred platforms.’
Santander says banks have an obligation to provide further financial education for their customers, but despite this also notes that 45 per cent of young people admit never having engaged with the resources offered by their bank.
Social media filling finance education gap
In lieu of financial knowledge gleaned from these institutions, or from school tuition or their parents, many young people instead turn to social media to find financial advice.
So-called ‘finfluencers’ using platforms such as TikTok are now the main source of financial information for 31 per cent of Gen Z according to Santander.
Previous data from Intuit Credit Karma suggests this figure could be closer to 36 per cent.
It suggests young people are using sources of information that may not be reliable.
Social media accounts may also promote products that are not suitable for their viewers, or fail to properly explain the risks of certain financial products.
On average, women are more likely to head to social media for personal finance tips than men, with 34 per cent using these platforms compared with just 27 per cent of men.
But some 75 per cent of women aged between 25 and 45 said they don’t have the necessary knowledge to maximise the value of their money, according to research by consultancy firm Think Stylist, suggesting that social media advice falls short of what is necessary to make informed decisions.
More than half of these women, 56 per cent, are responsible for managing their household budget.
‘We know young adults take to social media for news, for inspiration, to shop, to sell, so it is imperative that we position ourselves where they are and for what they are asking from us,’ Vereker said.
