Yahoo Finance Financial illiteracy among Gen Z worryingly low
It’s not often that we talk about the Beano around here.
But just as the latest Citizens Advice campaign gathers pace on TikTok and the Scouts launch a money matters badge, so the Bank of England has joined forces with the world’s longest-running comic in a bid to reverse a worrying financial blindspot among the nation’s children and young adults.
With children’s financial habits developing by the age of seven, and only a quarter of children enjoying learning about money at school, the “Money and Me’” primary school teaching resource challenges children to work out how Minnie the Minx should spend her £10 birthday money and even help Dennis avoid a charity fundraising scam.
“The current economic situation has demonstrated the importance of financial education,” says Andrew Bailey, Bank of England governor.
“However, this research shows how much further we have to go to embed it into the lives of young people.”
Last week the Scouts launched the money skills activity badge for Beavers and Cubs, building, among other things, on the “Thriftyman Proficiency” badge, last awarded in 1925, to help address the same issue while Citizens Advice and TikTok joined forces last month to create a financial education series to improve platform users’ track record on financial decision making and understanding jargon.
TikTok followed up last week with an outright ban on financial advice in a bid to curb an explosion in the incidents of wrong information and scams on social media platforms.
While advertising will continue to be permitted, influencers will not be allowed to promote financial products, including cryptocurrencies, buy now pay later schemes and share trading, in a move that will hinder well-known, reputable brands as well as fraudsters.
Generation Z and Millennials need all the help they can get. Despite being digital natives, the under-35s are now consistently the most likely group to fall victims to scams in a trend that is mirrored around the world.
Visa reports that, with average losses of £6,000 per person, the under-30s accounted for more than four in every 10 victims of fraud last year. Nor are they clued up on the consumer protections in place to help them if they do become a statistic.
Despite two-thirds believing they would spot a scam, younger consumers are being swindled by bank impersonators, social media scammers and phoney online retailers as criminals shift their sights to younger targets, not least because of their poor financial knowledge.
Stacey Lowman, financial coach for financial skills app Claro, says its research found younger people lacked even the most basic financial skills and awareness, with skills among the under-34s on average 16.5 per cent lower than the national average.
The OECD currently places the UK 15th out of 30 countries for personal financial knowledge, with average financial literacy scores were 12 per cent lower than those of top scorer France.
So even when they’re not being targeted by fraudsters, these generations are struggling with their financial health. “This age group is undoubtedly facing a more challenging financial environment than previous generations,” says Lowman.
“Student debt, high rental costs and house prices, combined with wage increases which haven’t kept up with inflated living costs means fixed outgoings are taking a much larger proportion of a young person’s income than ever before.
“While this unique financial environment certainly plays a part, these results suggest a deeper underlying problem in a lack of education about finances and money management taking place in UK schools.
“It seems that an entire generation of young people lack the basic skills that are so important for building a secure and sustainable financial future, exposing themselves to mental health implications.”
As spending levels begin to tick back up in line with Covid restrictions being lifted, the under-30s in particular already have a mountain to climb, and the skills gap means it isn’t being solved by simply earning more.
Despite incomes of £40,000 or more, more than a third of under-30s with high income spend more than they earn, only a quarter have started a pension and/or a savings account, the Claro figures suggest.
With barely half having any kind of monthly budget, this “high income, perpetually poor” group reports that they regularly spend more than they earn.
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