Teaching economics at school should be compulsory, we can only benefit from it

Economics should be taught, and tested, at all schools and treated with the importance of English and maths. That way we can have a more money-savvy and entrepreneurial society, writes Chris Blackhurst

Pupils sit apart during a socially distanced lesson (Getty)

At school, I was fortunate enough to study A-Level economics.

What economics gave me was a grounding in how money, business and markets function. I was taught about profit and loss, demand and supply, interest rates, assets and liabilities, debit and credit.

Everybody, early-on in their lives, should receive something similar and be taken through the practical basics of finance and business. It should be a compulsory, seriously-regarded and even tested, part of the national curriculum.

As a country we ought to be made to become more money-savvy. It would help our personal finances, would reduce damaging risk-taking and over-extended borrowing, and make us more financially and commercially aware, and even more entrepreneurial. It would benefit society and the economy enormously.

Lessons are currently held on the topic and school children are issued with useful guides, but it’s all a touch cursory. It’s questionable how many of the classes are of lasting value, whether the teachers (and therefore their pupils) give them their full attention, and if the booklets are actually read and absorbed. Such a vital component of our lives, money, deserves better than this.

Finance is not regarded as a “core” educational subject, when it very much should be – up there with maths and English.

Unfortunately there will always be some who borrow too much without a hope of repaying, but if they were fully aware of what they were getting into they might not be so bold

Instead, this vital area of life is left to parents. But a study this week found that more than a quarter of mums and dads do not feel equipped to talk to their children about money. Either they don’t feel confident with their own finances or, critically, they find it hard to explain in a way their children will understand.

The poll, of 2,000 adults with children aged up to 17, disclosed that 97 per cent thought it was important to teach their kids about money, but are unsure how – and when – they should start to introduce it.

In the survey, from M&S Bank, 35 per cent said they didn’t know what age their child should be when they approach the concept of money. Three in 10 (29 per cent ) are hesitant to talk about money with their children because they don’t feel they would be a good teacher. While 28 per cent find it difficult to simplify the topic, and don’t feel like they are very good with money themselves. More than a third (35 per cent ) struggle to explain things in a way their child would understand.

This has to change. Clearly, it should not be left up to parents alone to teach their their children. They don’t have the educational aids and expertise – as many of the respondents acknowledged, they would not be good teachers. The professionals, at schools and colleges, need to get more involved.

Among the reasons parents gave as to why it’s important to talk about money were that it prepares children for the future (75 per cent), because it’s a part of life (70 per cent) and to help them understand savings (62 per cent). A substantial proportion, 35 per cent, were concerned about helping their child appreciate the value of money in a world of digital payments.

And more than a third (36 per cent) of parents would like additional support on how to speak to their children about money and finances, particularly when it comes to answering tough questions.

The survey comes as the furore over “payday” loans continues. The reason high-cost short-term credit is so controversial is the interest charges that rack up if the borrower does not repay, and the ease with which some who should not be borrowing are able to take out loans. But as a tool to enable someone to borrow for an urgent need there is nothing wrong with this type of loan, provided they can repay soon – indeed for many people it is a much faster and accessible source of funding than going via a traditional bank.

The problem comes from ignorance. If they pay the money back quickly the interest charge will not be that onerous. It’s only when they don’t repay that the fee climbs, and they can enter a vicious spiral of mounting debt. If they know and realise that, they may tailor their borrowing accordingly. My eldest son used to borrow from the now discredited and collapsed Wonga when he was short towards the end of the month. When his pay went in he repaid the loan. He never had an issue with it at all (I was grateful because it saved turning to me).

Unfortunately there will always be some who borrow too much without a hope of repaying, but if they were fully aware of what they were getting into they might not be so bold (and yes, the loan companies also need to do their part by lending responsibly).

The M&S Bank poll was also released just as some mortgage providers said they would no longer lend to home-buyers who were relying entirely on “the bank of mum and dad” for the standard 15 per cent deposit. In their experience such people often did not make good borrowers versus those who had saved at least in part for the deposit. The mortgage firms are acting now, just as the first time buyer market is set to boom, thanks to the relaxation of stamp duty but against a backdrop of an economic slump and heavy job losses.

If we want people to avoid the pitfalls we need to explain to them how the system works.