Government plans to teach financial planning in schools have been welcomed by the adviser and investment community.
Curriculum guidelines set to be published on Thursday by the Qualifications and Curriculum Authority (QCA) will require schools to teach a subject called Economic Well-being from September.
It will be taught through an existing subject - Personal, Social and Health Education (PSHE) - alongside work-related learning, careers and enterprise, to children from the age of 14.
The move follows fears young people know little about finances, spurred on by rising student debt.
Duncan Philp, senior consultant at IFA firm Macbeth Currie, says teaching finance to young people would help stem the “horrendous” debt some get themselves in to.
“[It’s] great especially for debt problems people are experiencing now,” he says.
“It would make young people realise you can’t have everything today. You must plan for it. Some come to us with horrendous debts and I don’t just mean from university.
“Some come with credit cards. The amount of people going bankrupt nowadays is out of control.”
He adds one of the biggest problems in financial planning is young people are not interested because it is “boring”.
A spokesperson for the QCA adds: "Although financial planning classes are not a statutory parts of the curriculum, the new proposals go a long way to reinforcing the significance of these aspects and enable schools to approach them as they see best for their circumstances."
FSA chief executive John Tiner last week urged the Government to make this move.
“To create a more self-standing society in the future, young people will need basic levels of financial competence as they make key money decisions earlier in their lives,” he said.
“I would hope that Ed (Balls), in his new role as Secretary of State for Children, Schools and Families, will be able to ask his new colleagues to find room for financial education on the mandatory core curriculum at the earliest opportunity.”
Economic Well-being and Personal Well-being, a subject teaching sexual relationships, drugs and alcohol, will be two non-statutory study programmes at key stages three and four (ages 14-19).
Pupils will learn to manage their money, understand risk and reward, as well as learn how money can make money through savings, investment and trade.
They will also have to explain some financial terms relevant to their future personal and working lives and how to research financial options and recognise bias and inaccuracies in information.
In addition, children will also learn about business finance, including how companies manage finances and how to assess, undertake and manage risk.
This move is expected to be the first of many by the Government to educate people from a young age about the benefits of being money savvy.
In April the Government revealed plans to introduce initiatives over the next five years to improve financial knowledge in young people, including starting lessons in schools such as enterprise education, citizenship education and, from 2010, GCSE functional mathematics.
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"John Tiner is wide of the mark by stating that "young people...make key money decisions earlier in their lives". With the average age of the first time buyer being 34, the trend is in the other direction." Paul White, Belgravia Insurance ConsultantsIFAonline
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