Buyers’ training: educating youngsters to be good customers

This September, pupils at English secondary schools made their first acquaintance with a new subject: financial literacy.

Considering that less than half of British 18-34 year-olds say they have any understanding of financial products, politicians seem to have addressed a serious issue. Faced with worrying degrees of financial ignorance among their younger residents, Wales, Scotland and Northern Ireland had already introduced the subject.

“It’s essential,” says Wendy Alcock, campaigns manager at MoneySavingExpert, of the new curriculum. “All young people deserve the chance to be taught about the pitfalls and perils of money so that they are ready to tell the difference between good and bad debt, to understand when it’s right for them and when not, when their time comes. We live in one of the world’s most competitive consumer economies, where companies spend billions of pounds on advertising, marketing and sales training for their staff. This is a wonderful opportunity for schools to engage in what we call ‘buyers’ training’.”

Buyers’ training? Buying an item used to be a relatively simple transaction: if one had money in one’s wallet, one could buy it. Loans could, of course, solve the problem of insufficient funds, but they required additional steps. Credit cards, now available not just to income-earning adults but to students as well, have changed that. One might argue that financial education is long overdue.

“All research I’ve done shows how important it is to start when children are young,” says Elaine Kempson, an emeritus professor at the University of Bristol specialising in consumer financial issues. “For example, saving behaviour is set very early in life, as early as five. Children who are encouraged to save at that age invariably remain ‘rainy day’ savers all their lives. And children who are taught to live within their pocket money and ideally set some aside make good budgeters in adult life.” Had such prudence been taught to American five-year-olds in the 1970s and 1980s, the subprime mortgage crisis may never have happened.

Since legislators can’t dictate private schools’ curriculum, the new financial literacy programme is only being taught at state schools. Free schools and academies are also exempt, though many of them have chosen to introduce the subject. “Both primary and secondary schools have been delivering financial education for a number of years; however, from September 2014 financial education has been included within the statutory citizenship and mathematics National Curriculum for secondary schools,” says Michael Mercieca, chief executive of Young Enterprise. “Schools are all at very different points in their development and delivery of financial education within these subject areas.”

Mercieca says citizenship teachers are beginning to consider the personal finance implications of the wider societal issues they cover, and mathematics teachers are using more financial contexts to deliver areas of the maths curriculum. “In both subject areas this facilitates real and relevant learning for students, which in turn enhances engagement, and can potentially have a positive impact upon attainment,” he says.

With the curriculum only in its fourth month, it’s too early to evaluate its potential impact. But in an large study conducted in Brazil, financial education in schools had a measurable impact on children’s knowledge and behaviour. Kempson says: “There was a demonstrable spill-over effect onto parental behaviour too.” Alcock predicts that British parents will see results in 10-15 years’ time. “A generation of school-leavers will take on only debt which is appropriate for them which they have budgeted for and which will improve their lives.”

On last month’s Black Friday, an import from America where consumers go Christmas shopping the day after Thanksgiving, UK residents spent an estimated £810m. That’s good news for retailers, to be sure (though they’ll inevitably lose some revenue on other days). Yet despite its enormous discounts, Black Friday is hardly a financially literate buyer’s best friend, whatever his or her age. “Just because a product is part of a Black Friday offer, don’t assume it’s the cheapest,” says Alcock. “Shopping isn’t just about individual deals. If you know what you want it’s about tactics and techniques, too, and you can do that all year round. Have you compared prices? Can you afford it? Do you need it? If the answer is no to any of those, don’t buy it.”

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