According to financial campaigner and author Daniel Donnelly, founder of brokerage company Sherwood Finance, British schools are failing to prepare tomorrow’s employees with the financial skills required to meet life’s needs. The corporate sector, however, is ideally placed to fill that gap—for the benefit of all.
By Daniel Donnelly
For those school leavers intent on pursuing a career in finance, the UK boasts world-class financial education institutions to set them firmly on the road to success. Unfortunately, however, for young people more generally the picture is very different.
Shockingly, for a subject with life-long import and application, financial education is not compulsory in British schools. According to the London Institute of Banking & Finance (LIBF)’s Young Persons’ Money Index study—an annual survey that tracks the attitudes, behaviours, and experiences of young people aged 15–18, about money and personal finance—less than 64 percent of high school students now receive financial education in the classroom.
The study also found that 88 percent of children cite their parents as the main source of their their financial understanding and knowledge. This would be fine if the quality of this learning was uniformly high between households yet this is, of course, far from the case. For parents, perhaps themselves lacking the same training in the basics of money management, can as easily impart bad financial habits as good ones.
It is no surprise then that, again quoting the same study, 67 percent of young people say they regularly worry about their personal finances.
The matter is so troubling to me that I cannot help but think of today’s young adults as ‘Generation Red’—at risk of life-long debt.
But why should this matter to employers? Surely it’s not their responsibility to ensure that young recruits have a firm grasp of personal finance matters such as banking and budgeting, saving and investing, taxation and pensions, and so on?
At surface level, no, but dig a little deeper and you find that there is a clear corporate interest in ensuring employees are financially literary, irrespective of the sector they are operating in—namely, maintaining financial wellbeing.
We all known that stress in the workplace can have a serious impact on an organisation’s productivity, resulting in higher rates of staff absenteeism and turnover, poorer performance and morale, to name but a few of the risks.
While these come from within the office environment, employees can just as easily be affected by financial pressures outside of work, be those related to overspending and struggling to make ends meet, debts they can’t readily afford to repay, or poor credit ratings that prevent them, say, from securing a loan for a new car or being approved for a mortgage.
The cause of the stress is not directly related to work but the fallout on employers is the same: underperforming, unhappy staff. Those overly preoccupied with their financial situation are less likely to be engaged with their duties, more likely to turn to crutches like alcohol, and more likely to be a disruptive force, which will then affect not just their output but also their team’s. On the flipside, you may find issues of presenteeism—where the stressed employee is still coming into work despite being genuinely unwell—or overworking, with a staff member either pulling extra shifts or trying to hold down multiple jobs to bring in more money. In either scenario, it will eventually lead to burnout.
More than three quarters of employees (77 percent) state that that money worries impact them at work, according to a study by Close Brothers Group (Financial Wellbeing Index). The research also shows that nearly 90 percent of larger UK businesses are impacted to some degree by their employees’ poor financial wellbeing.
As employers, we have a duty of care to our employees’ wellbeing. Though this has largely been understood to pertain to working conditions, we should be also be sensitive and alert to any external causes of stress.
There are numerous approaches to dealing with financial wellness issues among staff, ranging from providing workplace loans and discount vouchers to financial advice referrals.
The most practical, and cost-effective, answer, however, is to do all we can to prevent the problem in the first place, and that all boils down to sound financial education.
The bottom line is, and should be, the most important focus of any business, but that can only be protected and grown if employees are thriving.
Businesses large and small will, by necessity, have team members with strong financial acumen so they could be utilised to pass on their know-how, or alternatively a financial management coach could be brought in for the same purpose. The training could be as little as one hour per week over a period of four weeks, or a one-off half to full-day workshop.
Even just a small investment of time and resources to provide basic financial education—on topics such as spending and saving, credit and loans, taxes and insurance and so forth—would reap tremendous benefits, not to mention the reputational boon it would provide.
And given how challenging things are just now, what with the economic impact of Covid and conflict, and the associated rising cost of living, such rudimentary financial education is more important than ever.
Not being a parent myself, it has only been through conversations with clients of mine who are parents that I have come to appreciate how badly we, as a nation, are serving our youngest member in preparing them for financial responsibility.
One of my clients even took his children into his local High Street bank to ask the clerk to teach them about saving money. The clerk didn’t care to do so, and nor was it within their remit to assist in this way.
That conversation motivated me to take on the task myself, drawing upon my financial training and professional experience. Following two years’ research, including speaking informally with hundreds of parents and their children about their financial awareness, I have made my own contribution to addressing the issue with a new book, Finance Tips And Tricks For Young Adults, that is aimed at teaching young adults the essentials of personal finance.
Equally importantly, it does so in a fun way—something neglected by school-based financial education, when that is actually offered. To this end, I’ve connected all these lessons, on everything from taxes and credit reporting to lending and budgeting.
The book is proving popular but it would be naive of me to think it will reach every young person in the UK.
It is only by all business owners coming together that we have any hope of making financially literacy, arguably the most vital life skill, the norm rather than the exception. Finance Tips And Tricks For Young Adults by Daniel J Donnelly is out now on Amazon, published through Sherwood Finance Limited and priced £11.50 in paperback and £7.20 as an eBook.
For more information about Sherwood Finance, visit www.sherwoodfinance.co.uk or follow the company on Facebook (@sherwood01), Twitter (@Financesherwood) or Linkedin (‘Sherwood Finance’).
Q&A Interview with Daniel Donnelly
We speak to financial expert and author Daniel Donnelly about why he’s on a mission to teach young people the rudiments of financial literacy.
Q. What was your financial education like growing up?
A. My financial education growing up was fairly limited, which has inspired me to write Finance Tips and Tricks for Young Adults. I entered the financial industry at a young age and was soon made aware that if I incurred any credit defaults I would lose my job, so I quickly became financially responsible! Over time, I have encountered numerous clients that, like me and many of today’s young adults, have been unaware of just how significantly their financial behaviour can impact their future.
Q. How can parents impact a young person’s financial education, positively or negatively?
A. Parents need to be aware that, in the absence of compulsory financial literacy education, they are on the frontline of their children’s financial future, either for good or bad. Our first financial habits are developed from our habitat so, for example, if a child’s parents have a good work ethic then it’s likely the child will likewise develop a good work ethic. The opposite is also true. Over the years I’ve spoken to countless parents about how their children waste pocket money or can’t save what they have earnt. Tough love is sometimes necessary.
Q. Why do you think financial education is not more widely taught in British schools?
A. It seems there is world-class financial education in the UK for school leavers who decide to study finance, but school leavers that don’t study finance are left to their own devices. I don’t understand why financial literacy is not a compulsory part of the curriculum when it is, perhaps, the most important life skill you can gain. Given just how many people regularly suffer from finance-related stress, and just how many people end up in financial difficulties, it’s a no-brainer that it should be taught as standard in every British high school. It doesn’t have to take the same length of time as a GCSE—a short course on mortgages, credit cards, and credit reporting, as well as budgeting and saving, would suffice.
Q. When should young people start receiving financial education?
A. I want to see the UK become a world leader in financial education. To achieve this, children need to be introduced to financial literacy at around 10 years old, or perhaps even earlier, so that by the time they finish school they are already well on their way to avoiding the common mistakes and pitfalls.
The sad truth is that many young adults in the UK and around the world are completely clueless about finance. I conducted an informal study of 500 parents and their children while writing Finance Tips and Tricks for Young Adults, and found that the overwhelming majority of young people, girls and boys aged between 14 and 17, are astonishingly and blissfully unaware of the simplest monetary concepts. It does not bode well for their future so I want to change that, and fast.
Q. What motivated you to write Finance Tips and Tricks for Young Adults?
A. I became motivated to write this book after hearing countless parents that were clients of mine complaining about the lack of financial education available for their children, I decided to take the matter into my own hands and after two years of research, the book is finally published. When I first set out on this task I hoped to finish within a few months but I soon came to realise that a good book cannot be written in just a few months! It’s quite thorough and there isn’t anything in the book about putting your money at risk. The aim is simply to equip young people with basic financial knowledge they will need to navigate through life effectively.
Q. What do you hope to achieve with Finance Tips and Tricks for Young Adults?
A. The book is published worldwide so my main hope is to achieve awareness around the world of the importance of financial literacy, and for young people to recognise that they should learn this skill as soon as possible. I also want the book to assist the many parents who are struggling to teach their kids about finance, hopefully improving their financial habits in the process.
Q. The book is accompanied by an app. Can you tell us more about this app?
A. The mobile application is additional value from buying the book, by testing the reader’s knowledge of what they have learned throughout the book. There’s a quiz that consists of 50 multiple choice questions and a few calculators. We have plans to continue developing the app in the future, so after doing the quiz please don’t uninstall!
Q. Finance Tips and Tricks for Young Adults is part of a wider series of financial education titles. Can you briefly sum up the other books?
A. Finance Tips and Tricks for Business Owners is coming soon. It includes the different financial products available for business owners and what lenders look for, among other things.
Q. Tell us more about your company, Sherwood Finance? A. While I was employed as a finance broker, I became tired of seeing clients being put through the cookie cutter and treated as sales targets. I saw value in offering a tailored
financial service and, in 2017, Sherwood Finance was launched. Our company offers financial services for commercial businesses in the UK and Australia.
Q. What are your plans for Sherwood Finance moving forward?
A. We are expanding into the United States, starting with New York, whilst developing new products in multiple European languages. At the same time we continue to make learning about finance more enjoyable by developing new products and improving our YouTube channel.