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- Issues such as debt and overdrafts are not adequately covered, say 18- to 21-year-olds
A quarter of young people leave high school without basic knowledge of personal finances and say they did not receive any financial education.
Of the current generation of young people aged 18 to 21, four million reached adulthood without having received any education on how to properly manage their finances, according to a Santander survey.
This comes despite financial education becoming part of the national curriculum for secondary schools a decade ago, in 2014.
The National Curriculum is only mandatory for council-maintained schools, and academies, free schools and private schools are not required to do so.
In practice, many of these schools also offer teaching in personal finance and money management.
However, only 13 percent of 18- to 21-year-olds surveyed by Santander said the financial information they learned in school was applicable to their own finances.
Knowledge gap: Despite being part of the curriculum, a minority of young people say they have not received any financial education
They said topics such as debt, overdrafts, loans and buy now, pay later are 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 and resilient relationship with money has a direct impact on the country’s economic stability, by reducing individual debt, instilling investment habits and encouraging entrepreneurship.”
Up to 79 percent of young people have never created a budget, while 76 percent have not paid a bill and 77 percent have not set aside money for unexpected expenses.
Vereker said: ‘Our research raises two major concerns: firstly, that the current school curriculum does not always provide young people with the knowledge they need to plan and manage their financial future.
‘Second, this gap is driving young adults to potentially unreliable online resources for advice.
“Banks have a critical opportunity to connect with young people by providing them with accessible and engaging financial guidance tailored to their needs and preferred platforms.”
Santander affirms that banks have the obligation to offer greater financial education to their clients, but despite this it also points out that 45 percent of young people admit to having never interacted with the resources offered by their bank.
Social media fills the gap in financial education
Instead of financial knowledge gained from these institutions, or from school tuition or from their parents, many young people turn to social media for financial advice.
So-called ‘finfluencers’ who use 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 sources of information that may not be reliable.
Social media accounts may also promote products that are not suitable for their viewers or fail to adequately explain the risks of certain financial products.
On average, women are more likely than men to turn to social media for personal finance advice: 34 percent use these platforms compared to just 27 percent of men.
But around 75 per cent of women aged 25 to 45 said they don’t have the knowledge needed to maximize the value of their money, according to research from consultancy Think Stylist, suggesting social media advice isn’t achieves what is necessary to make informed decisions.
More than half of these women, 56 percent, are responsible for managing their household budget.
“We know that young adults turn to social media for news, inspiration, shopping and selling, so it’s imperative that we position ourselves where they are and for what they’re asking of us,” Vereker said.