Our CEO wrote this article about Financial Education that was published by the British Banking Association (BBA) earlier this month.
The BBA represents over 200 banks. These member banks collectively provide the full range of banking and financial services and make up the world’s largest international banking centre, operating some 150 million accounts and contributing £50 billion annually to the UK economy.
Over to you, Lily.
There are two things I never tire of hearing.
From adults: “I wish I had that in school!”
And from a young person: “Not all debt is bad debt.”
That first exclamation is a reflection of the state of the nation. As individuals we owe £1.4 trillion and just 10% of adults have received any financial education. The second pearl of wisdom, we have had to work to achieve.
There is currently no sustainability in our education system. We teach children to read, write and add up, gear them to a career – but they can’t pay their credit cards and they lose their house? Bankruptcy, repossession, unemployment, the burden falls back on the state, on us.
Society has cottoned on to this glaring omission in how we prepare young people for the world of work and independent living. However, financial literacy is like climate change; we all agree it is important and something must be done, but who will take responsibility and what will it look like?
Today we have financial experts who are not teachers and teachers who are not financial experts attempting to bridge the gap. We have a plethora of online resources, expensive websites and the occasional school challenge. This does not cut the mustard if we want financially capable adults – especially after FSA studies show two out of three teachers do not feel confident teaching finance.
I founded MyBnk in 2007, a charity that teaches 11-25 year olds how to manage their money and start their own enterprises in schools and youth groups.
Our team of specialist trainers work face-to-face with groups of up to 30 participants. Every workshop is tailored to match young people’s needs and map into a school’s curriculum. We use real life case studies, colourful resources, games and videos drawn from popular culture, enabling young people to explore and form their own opinions regarding their relationship with money and enterprise.
We have helped 45,000 young people in over 240 schools, pupil referral and leaving care units across London, and the North of England.
Our programmes range from budgeting and borrowing to tax and student finance – backed up with Europe’s first independent, FSA approved online and in-school banking system.
Part of what makes this effective is being experts in our field and working face-to-face, ensuring the learning experience is never diluted. Comprised of teachers, financial experts, young people and youth workers, we collaborate to design and deliver lessons that speak to youths in their language, in their neighbourhoods.
Our Head of Expansion, Melanie Robinson, spent the first two years of her professional life as a trainee Actuary before heading into the third sector:
“I was seeing poor personal finance decisions every day and it became increasingly disheartening. People were swapping final salary pensions for risky money purchases schemes because they did not understand how pensions worked. Once I joined MyBnk I used my knowledge and experience to help people make informed decisions. Within months I was building an on-line bank which students use to develop savings habits. A bit more rewarding!”
Part of what makes financial knowledge stick is engagement of financial services. Mistrust of banks is being translated into pounds and pence as people move their money. An MRM consultancy study found just 17% of 20 to 29-year-olds would recommend their bank to a friend. A PricewaterhouseCoopers report said young people were swerving credit cards and turning to expensive and dangerous payday lenders. We need these trends to be reversed.
MyBnk-in-a-Box is our flagship programme, a bank run by young people, for young people to offer fellow students practical experience of saving and lending with real money. Society needs banking. The sooner young people are familiar with it, the better they can develop sound financial habits and navigate the system – stay out of debt, manage student loans etc.
This summer when we received the Centre for Social Justice Award for Poverty Prevention, Private Eye’s, Ian Hislop, was gobsmacked that young people volunteered to be bankers and were proud of it. But there it was, a young banker from Newham beaming at him on the podium!
Pupils have deposited thousands of pounds and save on average £3.54 a week. That is 56% of the average pocket money allowance. With the same habits an adult would bank £218 a week on a £26,000 salary!
Nearly 1,000 young people have had their first enterprise experience with us, starting over 100 ventures via interest-free loans and business support. On average they made a profit of 73% and half had a social enterprise element.
Our numbers might not be as big as many one-off initiatives but our work is impactful and a sustainable platform for growth. It is also cost effective. A single trainer visits several different settings delivering varied lessons to different demographics in one day.
This work is not carried out in isolation. From ING employment engagement to a KPMG Trustee and The Worshipful Company of International Bankers sponsoring a youth-run bank – effective corporate partnerships and support has helped build MyBnk.
The question I am always asked is, does it really work?
In the last academic year we delivered 295 MyBnk programmes in Lambeth with support from JP Morgan Chase Foundation. Oxford ISIS Consultants examined the effects of money lessons on 6,286 young people in 20 secondary schools and youth organisations. They discovered the academic equivalent of a magic bullet. Co-created resources and direct delivery by experts had resulted in a “significant increase” in three areas of financial capability: knowledge, skills and attitudes, and values and self-belief.
In a follow-up, months later, core knowledge was retained and a Greenwich control group confirmed a major divergence in financial capability. The biggest improvements came in understanding banking/accounts and interest, the flow of money, credit history, tax and knowing how to manage money better in the future.
If you gave me control of policy tomorrow, what would I do?
I would move the millions spent on silo projects to create a Financial Education Fund backed by the government and providers. A single fund which linked specialist providers to schools. Such an umbrella structure would help groups work towards the same mission. This could include a saving scheme that starts from childhood and aims to create lasting behavioural change, similar to Respublica “Asset Building for Children” proposal or a variation of Junior ISAs.
What I am doing at MyBnk is bringing together all of the disciplines, forging creative corporate partnerships and young people to create microfinance tools and lessons that work.
Sounds sustainable, doesn’t it?