Every generation thinks they have it the toughest, but when it comes to managing money this generation has a good case to make.
Recent research revealed that almost half of young people aged between 13 and 18 worry about managing money. However, unlike previous generations they are faced with navigating new financial trends such as instant payments, understanding online fraud, and risky products such as crypto.
A lack of financial street-smarts can have a devastating impact, from falling victim to scams to finding yourself in debt. Increasingly, there has also been a worrying trend of young people coming before the courts charged for acting as money mules by allowing their bank account to be used by fraudsters.
Young people need to have the knowledge, tools and confidence to manage their finances so they can cover day-to-day expenses, plan for the future and cope with the unexpected.
Research commissioned by Bank of Ireland revealed that 88 per cent of young people learn financial literacy and money management skills predominantly from their parents, while only 57 per cent referenced teachers
This is why financial literacy is the essential ingredient for lifelong financial wellbeing.
Where young people learn money management skills is important. Research commissioned by Bank of Ireland revealed that 88 per cent of young people learn financial literacy and money management skills predominantly from their parents, while only 57 per cent referenced teachers, and 25 per cent from online resources.
What this suggests is that if your parents are good at managing money, then the chances are you will be, too. However, the opposite is equally the case and that is a problem when it comes to perpetuating intergenerational poor financial literacy.
We need to break that cycle. That’s why we believe the classroom and national curriculum are the great equalisers that give everyone the opportunity to learn.
School programmes
Across Ireland there are many organisations, in both the private and public sphere, that offer programmes on financial literacy. Our own school programmes focus on providing young people with the content and tools to educate and empower themselves to take control of their finances and make decisions with confidence. More than 418,000 students, both primary and secondary, have taken part in our programmes since 2017.
By increasing the time spent on financial literacy in the classroom we can also help turn Ireland’s poor financial literacy score around. At 54 per cent, Ireland’s national score is low and lags behind our closest neighbours and global peers such as the UK, Denmark, and Germany. The index also reveals a striking difference across gender and age, with those aged 18 to 34 scoring lowest (at 48 per cent) with the highest score for over 65s (at 58 per cent).
One worrying trend is that women scored almost 10 per cent lower than men, and this is reflected internationally as well. One Swedish survey highlighted the issue of “stereotype threat” – when women believe that their gender is worse at handling money, they make worse financial decisions. The survey found that among girls aged 13 to 15, financial literacy deteriorated as stereotype strength increased. By integrating financial education into the curriculum, we can help to counter these damaging stereotypes.
This would would help to build a financially healthy and more financially resilient nation, with a positive impact on individuals, their families, businesses, communities and the wider economy
Following the publication of our research, and complementary research from the National Adult Literacy Agency and the Economic and Social Research Institute, we welcome the commitment from the Minister for Finance Michael McGrath that the Department of Finance will work with all stakeholders to develop a National Strategy for Financial Literacy in line with best international practice.
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As part of this process, Bank of Ireland will advocate that youth financial literacy needs to be at the core of a new national strategy. One outcome of this strategy should be the development of a national programme, integrated into the curriculum, for financial literacy in schools. Improved youth financial literacy levels will have benefits for students well into adulthood. They will be better equipped to make sound financial decisions, to fully understand their own financial circumstances, and the products and services that they require to help them thrive throughout the different stages of their lives.
This would benefit all of us. It would help to build a financially healthy and more financially resilient nation, with a positive impact on individuals, their families, businesses, communities and the wider economy.
It would also mean that everyone would have the opportunity to learn, not only those who have the good fortune of learning money skills from their parents.
Dawn Bailey is head of financial wellbeing at Bank of Ireland.
