3 year study confirms financial education changes behaviour

Published by Hannah Wooderson for 24dash.com in Education

The University of Manchester today published the findings of their three year study into the effectiveness of standalone qualifications in personal finance.

The research, tracking more than 3,000 students over a period of up to three years, demonstrates beyond doubt that standalone financial education qualifications can dramatically improve individuals knowledge, skills and confidence in financial matters and that long lasting behavioural change can be achieved as a result.

The research tracked students who had taken a standalone Certificate and/or Diploma in Financial Studies (AS and A level equivalent qualifications) from financial education charity the ifs School of Finance.

This comprehensive research reaches a number of powerful conclusions. These include:

• A specifically designated and substantial qualification is effective in changing young peoples financial behaviour (this contrasts with the Government approach of thinly spreading financial education across the curriculum in a variety of subjects)
• Personal financial management education is effective when provided at a time when young people are experiencing the transition towards greater independence and adulthood (this contrasts with the approach of many who believe that early years and a focus on primary school children is appropriate).
• Approximately 95% of students reported understanding money matters after taking the course and high levels of knowledge and financial awareness continued to be reported at both the 10 and 22 month follow up periods (FSA research published in July 2008 suggested there was no evidence that other forms of financial education produced lasting improvements)
• Students confidence greatly increased e.g. confidence to go to a bank and discuss financial matters, greater confidence in how to research financial options and products and so on

The report will be officially launched at a reception in parliament this afternoon (Wednesday 28th January 2009). Dozens of MPs and Peers from all political parties will be attending to hear Conservative Shadow Treasury Minister David Gauke MP, Liberal Democrat Shadow Secretary of State for Children Schools & Families, David Laws MP and Labour MP Mark Lazarowicz (Chair, All Party Parliamentary Group on Debt & Personal Finance) speak in support of the University of Manchester report findings.

The event, sponsored by R3 (the Association of Business Recovery Professionals) will also be attended by a wide range of education and finance professionals including representatives from the Financial Services Authority, Citizens Advice Bureau, Financial Services Skills Council, Institute for Education, Credit Action and many other stakeholders.

Anne Kiem, Dean of Further Education at the ifs School of Finance, said: “We are obviously delighted that senior figures in each of the three main political parties are showing their support for both the University of Manchester research and the ifs School of Finance approach to financial education. We hope that this support will eventually translate into action to ensure many more young people are able to leave school and college with the ability to make informed financial decisions.”

Nick O’Reilly, President of R3, the insolvency trade body added: “I am in no doubt that we are reaping what we have sown in terms of personal debt levels, and this will continue unless we change our behaviour. Every day R3 members see personal debtors who have got into this situation because of a lack of skills and confidence in financial matters.

I wholeheartedly endorse the idea of qualifications in personal finance, such as those offered by the ifs School of Finance. On a day-to-day basis, financial education is something that people would use above any other qualification.”

The ifs School of Finance is currently the only provider of Qualifications & Curriculum Authority (QCA) accredited GCSE, AS and A level equivalent qualifications in personal finance.

These are the Foundation and Intermediate Certificates in Personal Finance (GCSE equivalent) Certificate in Financial Studies (AS level equivalent) and the Diploma in Financial Studies (A level equivalent). These qualifications have already been taken by over 20,000 teenagers and are currently being taken by a further 20,000 14-19 year olds across the UK.

The ifs School of Finance believes that Government should add a standalone qualification in personal finance to the school curriculum. This would put personal finance on an equal footing with other subjects such as Geography, History and Modern Foreign languages i.e. compulsory for schools to offer personal finance as a GCSE or equivalent option so that every teenager has the choice as to whether or not to take such a qualification.

For further information please visit www.financialcapability.co.uk