New research from mortgage broker service provider Boon Brokers reveals that despite financial literacy being introduced into the national curriculum over a decade ago in 2014, the majority of young adults in the UK are leaving school with a worrying lack of financial education.
By speaking to 1,000 respondents aged 16 to 24 in the UK about their education on mortgages, Boon Brokers found that 83 per cent of young adults do not believe school was their main source of education regarding mortgages. In fact, it found that the majority of respondents rely on their family to provide them with the educational and working knowledge of mortgages.
However, the mortgage broker revealed that key areas of mortgages, such as interest rates, debts, mortgage length, and the basic affordability requirements, aren’t being taught by either schools or families. It also warns that if parents remain the main source for information about mortgages, we run the risk of recycling outdated misinformation, generation after generation.
The research found that 14 per cent reported social media as their primary source of education, highlighting a tiny three per cent influence gap between social media and schools (17 per cent).
This research shows that young people are leaving their financial education and security, not in the hands of a qualified and educated institution, but in the hands of potentially unqualified ‘influencers’.
The 2014 reform stated plans to cover “income and expenditure, credit and debt, insurance, savings, and pensions, financial products and services” – all topics implicitly related to mortgages. Despite this, over 10 years on, the results suggest these efforts have not been successful.
Despite a number of government initiatives and increased funding since 2014, 58 per cent of young adults say there were no facilities provided at school for them to learn about mortgages. More tellingly, among the respondents aged 18 to 21, who should have been directly impacted by the curriculum changes, revealed an almost identical percentage to those aged 22 to 24.
Time for reform?
Speaking to The Fintech Times, Gerard Boon, managing director at Boon Brokers, explains the importance of proactive action being taken to make financial education a more prominent part of financial education, particularly in its early stages.
“Regarding the educational shortcomings identified in our research, I believe a fundamental shift is needed in how we approach financial education for young adults,” says Boon. “At its core, school is an institution that prepares young adults for life. In this light, financial concerns like mortgages and economics should be fundamental.
“As such, financial education must become a compulsory and integral part of the curriculum from an early stage. The curriculum should evolve from basic financial principles like budgeting to more advanced topics, instilling critical thinking in financial decision-making and broader economic concepts.
“Equally important is ensuring that the information young adults receive is factual, accurate, and relevant. This will require strategic collaboration between government bodies, financial institutions, and educational organisations to develop standardised, high-quality financial literacy resources.
“It’s essential that we place significant emphasis on financial education so that young adults can make informed decisions about their futures. Importantly, a stronger financial education won’t just help aspiring first-time buyers of the future avoid financial pitfalls; it will start to foster a financially resilient society capable of navigating an increasingly complex financial landscape.”
A new focus is necessary
“The results of this research makes one thing abundantly clear: the current financial education in the UK is not equipping the young people of today with the financial skills that they will need to navigate real-world financial responsibilities,” added Boon in the study.
“With 83 per cent of young adults not viewing school as a primary source of education on the topic of finance and mortgages, we’re starting to see social media rise as a more impactful source of education than that of the educational institutions
“With data outlining how parents and social media are leading the way as ‘reliable’ sources of financial education, the structures of formal education are taking a back seat, as young adults are stepping into one of life’s biggest commitments with confidence but no clarity.
“To prevent a generation from unknowingly walking into poor mortgage decisions and long-term debt, a new focus on practical and relevant financial education is urgently needed.
“It’s time to stop treating mortgage knowledge as optional, when it is so very clearly essential for everyone who wants to own their own home.”
Source: https://thefintechtimes.com/
