Introduction
The financial literacy crisis in the UK is reaching a tipping point, exacerbated by the cost of living crisis. Amidst this, the government is pushing for extended maths education up to the age of 18. However, with high failure rates in maths resits, the question arises: is traditional education enough? “Planning My Life” offers a holistic solution that fills the gaps left by conventional methods.
The Distinction Between Numeracy and Financial Literacy
Mathematical numeracy and financial literacy are two distinct but interrelated concepts. Numeracy is the ability to understand and work with numbers, while financial literacy is the ability to understand and manage personal finances¹. Studies indicate a positive correlation between the two; higher levels of mathematical numeracy often lead to better financial literacy skills²⁵.
The State of Financial Literacy in the UK
A recent study by Shepherds Friendly revealed that just 27% of Brits passed a basic money literacy test. Meanwhile, Rishi Sunak’s plans to make maths compulsory until 18 aim to make the subject more practical, focusing on real-world applications like taxes. Yet, this year alone, around 130,000 pupils failed their maths resit, casting doubt on the effectiveness of traditional approaches.
The Importance of Financial Literacy
The lack of financial literacy has far-reaching implications, from individual stress to societal inequality. Poor mathematical numeracy skills can lead to poor financial decision-making, resulting in high levels of debt and financial instability¹. The cost of living crisis has made it imperative for people to understand the nuances of personal finance, from budgeting to investing.
The Shortcomings of Traditional Financial Education
While Sunak’s initiative is commendable, critics argue that the shortage of maths teachers and the high resit failure rates make it an uphill battle. Moreover, most people still rely on banks and TV shows for financial information, which often lack depth and personalisation.
Introducing “Planning My Life”
This is where “Planning My Life” steps in. For a subscription of £19 per month, members gain access to a plethora of planning resources, including innovative tools like HapNav and MoneyFitt. These AI-driven platforms demystify financial planning, making it accessible and personalised.
The Role of ISAs and Savings
The Shepherds Friendly study also found that only one in three Brits are putting their savings into an ISA. “Planning My Life” educates its members on the importance of ISAs and other investment vehicles, steering them away from keeping savings in non-interest-bearing current accounts.
The Gen-Z Factor
Interestingly, Gen-Z is turning to TikTok for financial advice. While the platform may offer some insights, it cannot replace a comprehensive financial education. “Planning My Life” aims to be that reliable source, especially for younger generations.
The Government’s Role and Limitations
Sunak’s plans, although ambitious, face several challenges, including a shortage of qualified teachers. “Planning My Life” complements these governmental efforts by providing an alternative, more immediate solution.
Conclusion
Having strong mathematical numeracy skills can help improve financial literacy and reduce the risk of poverty¹. It is crucial to develop these skills early in life to ensure that individuals are equipped with the knowledge they need to make informed financial decisions. “Planning My Life” offers a comprehensive solution that not only educates but empowers individuals to take control of their financial destiny. It’s not just about surviving the financial maze; it’s about mastering it.
Source: Conversation with Bing, 04/09/2023 (1) Why is Numeracy Important? – The Effects of Poor Numeracy. (2) “The Connection between Financial Literacy and Numeracy”. (3) Numeracy Level, Mathematics Problem Skills, and Financial Literacy. (4) Relationship between previous mathematics performance. (5) The Relationship of Financial Literacy with Cognitive Ability.
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