- Topics such as debts and overdrafts are not sufficiently addressed, for example people aged 18-21
A quarter of young people leave high school without basic personal finance knowledge and report having no financial education at all.
According to a Santander study, four million of the current generation of 18-21 year olds have entered adulthood without learning how to properly manage their finances.
This is despite the fact that financial education became part of the National Curriculum for secondary schools ten years ago, in 2014.
The National Curriculum is only compulsory for schools run by councils, while academies, free schools and private schools are not required to do so.
In practice, many of these schools also offer education in the field of personal finance and money management.
However, only 13 percent of 18-21 year olds surveyed by Santander said the financial information they learned at school applied to their own finances.
Knowledge gap: Despite this being part of the curriculum, a minority of young people say they have not received financial education
They said topics such as debt, overdrafts, loans and buy now pay later were not adequately covered in schools.
William Vereker, chairman 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.
‘Giving them the knowledge and skills to develop a healthy, resilient relationship with money will have a direct impact on the country’s economic stability, by reducing individual debt, building investment habits and encouraging entrepreneurship to encourage.’
As many as 79 percent of young people have never made a budget, while 76 percent have not paid a bill and 77 percent have not put money aside for unexpected expenses.
Vereker said: ‘Our research raises two key concerns: first, that the current school curriculum does not always equip young people with the knowledge they need to plan and manage their financial future.
‘Second, that this divide leads young adults to potentially unreliable online sources for advice.
“Banks have a critical opportunity to connect with young people by providing accessible, engaging financial guidance tailored to their needs and preferred platforms.”
Santander says banks have a duty to provide further financial education to their customers, but notes that 45 percent of young people admit they have never used the resources their bank offers.
Social media is filling the gap in financial education
Instead of the financial knowledge they acquired from these institutions, or from college tuition, or from their parents, many young people are instead turning to social media to find financial advice.
So-called ‘influencers’ using platforms like TikTok are now the main source of financial information for 31 percent of Generation Z, according to Santander.
Previous data from Intuit Credit Karma suggests this figure could be closer to 36 percent.
It suggests that young people are using information sources that may not be reliable.
Social media accounts may also promote products that are not suitable for their viewers, or do not properly explain the risks of certain financial products.
On average, women turn to social media for personal finance tips more often than men: 34 percent use these platforms, compared to just 27 percent of men.
But around 75 percent of women aged 25 to 45 say they don’t have the necessary knowledge to maximize the value of their money, according to research from consultancy Think Stylist. This suggests that social media advice falls short of what is needed to make informed decisions.
More than half of these women, 56 percent, are responsible for managing their household budget.
“We know that young adults use social media for news, inspiration, shopping and sales, so it is imperative that we position ourselves where they are and for what they are asking of us,” Vereker said.