To reduce inequality and build wealth, we need to solve financial literacy
Everybody recognises the stark inequalities that exist in income and wealth across society. Increasingly, these gaps shape far more than the size of a pay cheque. They influence our prospects for social mobility, health, wellbeing and even life expectancy. They determine whether children grow up able to shape their own future or remain constrained by circumstances beyond their control.
Inequality is not just a moral concern: it is an economic one. When large numbers of people are prevented from reaching their potential, they are more likely to be prey to misinformation, more likely to be frustrated and angry, and to believe in those who advocate easy solutions to very complex problems. The whole country loses out.
This is why the Harris Federation – operating 55 academies and educating one in 37 of London’s children – is so proud to be part of the work City Pay It Forward is doing to empower the next generation.
Everybody recognises the stark inequalities that exist in income and wealth across society. Increasingly, these gaps shape far more than the size of a paycheque. They influence social mobility, health, wellbeing, and even life expectancy. They determine whether children grow up able to shape their own futures or remain constrained by circumstances beyond their control.
When large numbers of people are prevented from reaching their potential, society as a whole loses out.
Some of these differences stem from factors no individual can control: the family we are born into, our parents’ income and education, or the opportunities available in our local area. Others arise through unequal access to high-quality schooling. Yet there is another, often overlooked factor that plays a decisive role in shaping a person’s future – financial understanding.
Wealth without financial awareness rarely lasts. The old saying that “a fool and his money are soon parted” remains painfully accurate. But the reverse is also true: those with limited means find it far harder to improve their circumstances without a solid grasp of budgeting, saving, borrowing and planning. Financial literacy is not a luxury for the wealthy: it is a toolkit for resilience and opportunity.
Unfortunately, as yet we have fallen short in the UK in preparing young people for the financial realities of adulthood. Research by Compare the Market and the financial education charity Money Ready found that only two in five young adults can be considered financially literate.
Nearly two-thirds said they received no financial education at school, and those who did estimated it amounted to less than an hour a month. For a skill that will influence every major decision of their adult lives – from managing bills to navigating credit, mortgages or pensions – this is a shocking shortfall.
The Centre for Social Justice has highlighted evidence showing that people with stronger financial literacy cope better with unexpected shocks, are more likely to save for the future and are less likely to fall into unsustainable debt. In other words, financial education is a powerful preventative tool. It fosters independence, reduces long-term pressure on public services and strengthens the wider economy.
If we want to improve life chances, level up opportunity and build a financially resilient nation, we must start where it counts: in our schools. Harris and City Pay It Forward align around the same belief that embedding high-quality financial literacy into the curriculum is not about teaching children to chase wealth (not that there is anything amiss with this): it is about giving every young person the confidence and competence to navigate the world they are about to enter.
Financial education is not an optional extra. It is a fundamental life skill – and one that the next generation cannot afford to go without.