International evidence

At Young Money, we know that teachers, parents and young people think it is essential to learn how to manage money and plan for the future. This view was formally endorsed by the Department for Education in 2014 when financial education became a compulsory part of every school's curriculum. But how do we know that learning about money in the classroom is effective? This section details some of the research and evidence from around the world.

Many countries across the globe have introduced lessons in managing money for school aged children and young people.  In 2005, the Organisation for Economic Co-operation and Development (OECD) published recommendations on financial education and awareness, including the recommendation that ‘Financial education should start at school’.  

In order to compare financial literacy in schools, the OECD Programme for International Student Assessment (PISA) is testing 15 year olds on their knowledge of personal finances and the ability to apply it to real life money management. The findings of this large-scale international study will be published in June 2014 and will help to identify what strategies have the best impact on young people's financial capability. The UK will take part in the financial literacy component of the PISA test for the first time in 2015.

The evidence base for financial education continues to grow as this important subject reaches more and more pupils. Below are some key findings from the last seven years.

Key findings

Financial education in schools has an immediate impact on financial capability, increasing knowledge and skills, improving confidence in dealing with money and changing attitudes to saving and borrowing.  It increases the likelihood that young people will keep a budget and save money.

  • The Developing financially capable young people (Ofsted, 2008) report  draws on a small survey of secondary schools and colleges carried out during 2006/07 to identify features of good practice in financial education. It examines the case for financial education being part of the curriculum for all 11-18-year-olds and considers current weaknesses in provision and the barriers to future development. The report makes a number of recommendations to improve financial education. Ofsted found that: “Students in the schools and colleges visited that were successfully developing personal finance education showed a good understanding of personal finance, were able to use financial terms correctly and were able to apply their knowledge to making financial decisions.”
  • Adults who received financial education in school are more likely to save and plan for retirement and to accumulate greater wealth. See Financial literacy, Schooling and Wealth Accumulation; Berman et al.  Pension Research Council Working Paper 2010 and  Baby Boomer Retirement Security: The roles of Planning, Financial Literacy and Housing Wealth; Lusardi and Mitchell. Journal of Monetary Economics 2007.
  • Adults are also more likely to manage day to day money better, e.g. paying their credit cards on time, living within their means, completing income tax returns and to perceive they have sufficient savings and investments. The Impact of Financial Education in High School and College on Financial Literacy and Subsequent Financial Decision Making. Mandell 2009
  • Higher levels of financial literacy (which we expect high quality financial education to deliver) are associated with shopping around e.g. choosing mutual funds with lower fees or cheaper mortgages; avoiding high interest payments and additional fees; lower rates of mortgage delinquency; a greater likelihood of seeking financial advice. These examples are referenced in the PISA 2012 Financial Literacy Framework 
  • See also Financial Literacy and Subprime Mortgage Delinquency. Geradi et al, Federal Reserve Bank of Atlanta, 2010
  • On seeking financial advice, see Financial Literacy and the Demand for Financial Advice. Monticone, 2011, and Do Smarter Consumers Get Better Advice?  Bucher-Koenen 2011
  • Children pick up the money habits of their parents. Habit Formation and Learning in Young Children. The Money Advice Service and University of Cambridge, 2013  finds that attitudes to money are formed by the age of 7 years old, meaning that parents, early years' carers and teachers can positively shape financial behaviour. Correlations in financial behaviour between children and their parents. Centiq  September 2008 shows that financial education in school can help overcome the disadvantage of having parents who are poor money managers.

There are numerous examples of children getting financial education in school and using it to improve their family finances.  Some of these can be found in the Developing financially capable young people report, Ofsted 2008. 

​Find out how pfeg has influenced financial education in schools and what impact this has had on children and young people - Evaluating Young Money's work.