Office for Standards in Education (Ofsted)
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Teaching young people to manage their money is important, according to government, head teachers, students and financial institutions alike.
Ofsted's new report, 'Developing financially capable young people' shows that delivering better teaching of personal finance education in schools and colleges can equip students with the right mix of skills and attitudes to help them manage their finances sensibly. It can also help prepare them for the world of bank accounts, credit cards, insurance and mortgages.
Miriam Rosen, Director of Education at Ofsted said:
"Providing personal finance education in schools can have a significant and lasting impact on pupils' future prosperity and help them to successfully navigate the financial market - from mortgages and pensions, to whom to bank with - when they leave education.
It is important that young people are able to make confident and informed decisions about their money and therefore benefit - rather than be excluded from - financial services."
According to Ofsted's inspections, students in schools and colleges that are teaching personal finance skills successfully showed a good understanding of the issues. They were able to use financial terms correctly and apply their knowledge to making financial decisions. The programme worked because it was strongly supported by senior managers who gave it time in the curriculum.
It was often backed up by 'off timetable' days where pupils were offered practical extra-curricular activities such as running school banks, 'mini' enterprises, school productions and taking part in investment competitions.
Students did best when teachers had a confident grasp of the subject, skilfully managed discussions, used outside sources of information effectively and set tasks that engaged students according to their age and ability.
Accredited courses that lead to a formal education inspired a more coherent curriculum and sharper focus on the learning outcomes students were expected to achieve, although in most of the institutions visited, only a minority of students were following this type of programme.
Introducing personal finance issues into a range of subjects also helped to raise interest and increase students' motivation, although there was often a lack of coherence in the provision when schools attempted to deliver all of personal finance education across the curriculum.
Schools and colleges often failed to make clear what they expected students to achieve and the monitoring of progress frequently contained weaknesses. Issues relating to families on low incomes and different cultural beliefs concerning borrowing and lending were often neglected or dealt with ineffectively.
The main barriers to developing personal finance education were pressures on curriculum time; teachers' lack of subject knowledge and expertise in the area; a lack of awareness of available resources or other forms of support for the subject and the very wide variation in the nature of post-16 provision.
Miriam Rosen added:
"If our recommendations are acted upon, we believe students will have a far greater chance of effectively managing their money and avoiding debt in years to come."
The Department for Children, Schools and Families (DCSF) and the Department for Innovation, Universities and Skills should:
- provide clear guidance to schools on how adequate curriculum time can be found at Key Stage 3 and Key Stage 4 to teach economic well-being and financial capability
- support the professional development and training of teachers in schools and colleges to improve personal finance education, including the sharing of good practice and increasing awareness of available resources
The Qualifications and Curriculum Authority (QCA) should:
- build accreditation for aspects of personal finance education into subjects and learning programmes where appropriate
- identify the detailed learning outcomes expected at the ages of 14, 16 and 19
- provide guidance on how to assess financial capability
Schools and colleges should:
- ensure sufficient priority is given to developing a coherent programme of personal finance education in the curriculum
- ensure teachers involved in personal finance education are confident in their knowledge and have the appropriate classroom skills to teach it
- develop systems to monitor and evaluate the progress students are making towards achieving learning outcomes for personal finance education
- improve the teaching of personal finance education so that young people from all backgrounds can assess financial services and manage their money effectively
1. The report is based on visits made by her Majesty's Inspectors between April 2006 and April 2007 to 18 secondary schools, two pupil referral units and two sixth form colleges.
2. The institutions selected were ones where Ofsted's own inspection evidence or suggestions from the Personal Finance Education Group (pfeg), the ifs School of Finance or the Specialist Schools and Academies Trust, indicated that inspectors might see aspects of good practice in personal finance education.
3. The report also draws on evidence gathered through Ofsted's programme of inspections in business education in schools and colleges during 2006 and 2007 and refers to findings from recent surveys carried out by other organisations.
4. The government made a commitment in 2005 to include aspects of personal finance education in full in GCSE mathematics from 2010.
5. In July 2007, government announced the introduction of a new curriculum area called economic well-being and financial capability for all secondary school students for 11-16 year olds from September 2008.
6. Additional funding of £11.5 million is to be made available to support personal finance education in primary and secondary schools for three years from September 2008
7. The Personal Finance Education Group (PFEG) is an educational charity, funded mainly by the financial services industry and the FSA. It provides free advice and resources to schools and colleges and quality assures commercially produced materials for personal finance education