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MSE News: Financial education to be compulsory in schools

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  • Credit-Crunched
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    I have many clients who are teachers and their knowledge of the basics of money is actually quite scary.

    Having said that, they feel that an 80th's Final Salary pension is poor provision for retirement, so their views are somewhat distorted!
  • Pincher
    Pincher Posts: 6,552 Forumite
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    I have many clients who are teachers and their knowledge of the basics of money is actually quite scary.

    Let's sub-contract G4S to provide supply teachers.

    1. Thousands of redundant Energy Performance Certificate inspectors are waiting to be re-trained as finance teachers.

    2. Recruit Romanian teachers. They pay EURO100s to get a teaching qualification, which G4S will accept as real.

    That will fill the quota in no time.
    Having said that, they feel that an 80th's Final Salary pension is poor provision for retirement, so their views are somewhat distorted!

    Every Greek person I know think that too, and they are all UK Civil Servants.
  • magpiecottage
    magpiecottage Posts: 9,241 Forumite
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    edited 15 September 2013 at 7:46PM
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    I have many clients who are teachers and their knowledge of the basics of money is actually quite scary.
    I would agree with that. I have seen a teacher complain that she did not know that 25 plus her current age came to her retirement age and that a projected maturity value on an endowment policy that was lower than her mortgage amount meant there was a risk of a shortfall.

    FOS agreed that she was too stupid to understand!

    That said, first lesson in financial education:

    You do not "borrow" money in the sense that you might borrow
    your Dad's car. You RENT it, like you might rent a car from Hertz.

    And you keep paying the rent to the owner until you give the money back - just as you keep paying rent to Hertz until you give the car back.

    The only difference is that it not called rent - it is called interest.

    Get that knowledge between your ears first. Then you can decide whether you want to RENT £50K to take a punt on getting a degree (which may or may not get you a better paid job) or anything else.
  • mania112
    mania112 Posts: 1,981 Forumite
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    innovate wrote: »
    Who is going to teach, and assess, the teachers in time for 2014?

    Seems like it will be a small part of 'citizenship' so presumably the existing teachers for that class will just need to read a new chapter in their textbook?
  • jamesd
    jamesd Posts: 26,103 Forumite
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    Congratulations Martin!

    Some financial education can usefully be covered in probability:

    1. the way investment returns tend towards average results as the time for which money is invested increases.
    2. the way regular investing causes returns to tend towards the mean because the number of investment periods involved increases.

    Both of these are important for for long term financial planning in the form of pension and S&S ISA investing, where there seems to be some significant misperception that results always vary.

    There is one long term variability effect that remains: the value of markets at the time an annuity is purchased, if one is purchased. That leads on to the value of income drawdown and preparing for annuity purchase, both of which reduce the risk, again by exploiting knowledge of the variation in investment returns.
  • Martin, hopefully you are aware the battle is far from won. So financial education is now part of Citizenship (there is no significant change to the maths curriculum from this). Being ‘compulsory’ means students must take the course. Whether they take the course seriously is reflected by the number who actually go on to the GCSE examination.

    Maths and English are compulsory, and each had over 650,000 GCSEs awarded in 2012.

    On the other hand, 'compulsory' Citizenship (10,982 GCSEs awarded) sits between the non-compulsory study of the ancient Greeks and Romans (Classical Studies, 15,265 GCSEs) and Welsh as a second language (9,743 GCSEs).
  • TerryMI5
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    Great news!
  • charliehell
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    Problem is teachers don't understand finance so how can they teach the subject with any credibility? What will happen is that the very basics of money will be taught..with guest appearances by reps from banks..handing out badges and cups.

    Real financial education should have at least 2 hours a week focusing on debt, compound interest, mortgages, savings, loans, consumerism, government taxes and the stock market..with an examination at the end..none of that will happen, except only a rudimentary skirting of the main points - teachers need to be taught first..and that wont happen..
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