RACHEL RICKARD STRAUS: Teach children about money to tackle inequality

I will never forget the thrilling anticipation of waiting for my first paycheck, when I had a summer job as a waitress.

As I cleared tables and scraped food scraps into the trash, I daydreamed about what I’d spend that first paycheck on.

By the time I received it, I had spent it several times in my imagination. But when I ripped open the little brown pay envelope, I was jolted awake.

“National insurance?!” I thought in disbelief as I read my pay slip. ‘What is that?’

I knew that part of my income would go to taxes. But I didn’t expect another wodge to disappear with NI contributions. I would have to wait until the next payday to buy the CD from the band Ocean Color Scene I had my eye on.

I’ve since found that most of us have experienced a shock money lesson at some point. For some, discovering how easy it is to get into debt is when your bank hands you your first credit card.

For others, it’s learning how much extra costs there are when renting or buying your first home.

Millions of workers who will become senior taxpayers for the first time thanks to frozen tax brackets will also be in for a shock in the years to come.

But most of us come to the same conclusion: why do we have to learn these lessons the hard way?

Last week I spoke with Leon Ward, the new CEO of MyBnk, a personal finance charity. It goes into schools and teaches young people about bills, savings, budgeting – and yes, what to expect on a paycheck.

Leon said when he tells people about his work, the first thing they say is, “Oh, I wish I had money lessons in school.”

He believes – and I agree – that all young people should be taught about money throughout their school years.

But millions aren’t — nearly two-thirds of young people can’t remember having financial education.

The benefits go much deeper than avoiding learning by making our own mistakes. Offering money lessons in schools is one of the simplest – and cheapest – ways to tackle inequality.

New research from MyBnk published this week suggests that people who received some financial education in school are better able to cope with the rising cost of living and more resilient if their income suddenly drops. They are less likely to go into debt with eye-popping interest rates.

It’s not fair that some people have the tools to manage their money and others don’t.

It’s especially unfair because young people from higher-income households are more likely to have good money skills than young people from poorer households, the study found.

Most strategies to tackle inequality in the UK are expensive. The government’s Leveling Up fund totals more than £11bn.

In comparison, improving financial education is cheap and provides enormous personal and social benefits.

MyBnk calculates that for every £1 spent on money lessons for vulnerable young people in one of its programmes, it saves £5.57 in government spending for that young person in the future.

That’s because giving someone the skills to manage their money helps them avoid rent arrears, or prevents them from getting into debt, which means they might need benefits or other support from the state.

Money lessons help make people richer without giving them a dime. That must be a good idea.

Schools have a role to play, but we can all help by talking to friends and family about money and sharing our own experiences and money lessons we’ve learned the hard way.

MyBnk also believes that we should defend our best money teachers and celebrate when schools do well.

Fortunately, that has already started. The hunt for the best money teachers in Britain has begun this week. Investment platform Interactive Investor is offering a £25,000 prize pool to be shared among the winning schools in the Personal Finance Teacher of the Year awards.

If you know a teacher who deserves to be recognised, please email teacher@ii.co.uk to nominate them.

What is a money lesson you wish you had learned in school? I like to hear it.

r.rickardstraus@dailymail.co.uk