How to Teach Young People About Money: A Practical Guide for Parents, Teachers and Young Adults
Economy · Guide
How to Teach Young People About Money: A Practical Guide for Parents, Teachers and Young Adults
This plain-English guide explains the state of financial literacy among young people in the UK, what the evidence says actually works in money education, what is changing in schools from 2028, and gives a practical toolkit of skills, habits and free resources for young people, parents and teachers right now.
Quick read: key points
- 64% of young people in the UK feel anxious about money, and only 19% can answer basic financial literacy questions correctly, according to the London Foundation for Banking and Finance’s Young Persons’ Money Index 2025 to 2026. Yet 80% of those same young people said they wanted to learn more about finance.
- Only one in four young adults (26%) report having received any financial education at school, despite financial education being part of the secondary school citizenship curriculum since 2014. A decade of compulsory secondary education has not worked well enough. The quantity of lessons and the quality of teaching support are the main problems identified by researchers.
- From September 2028, financial literacy will become statutory in primary schools in England for the first time. Primary pupils will learn about the purpose of money, budgeting, saving, spending and distinguishing needs from wants. Secondary education will be strengthened to include more complex digital financial skills including fraud and scam prevention.
- The strongest evidence on what works in financial education is that practical, applied learning beats theoretical instruction. Giving young people real decisions to make with real or realistic money, rather than teaching them definitions, produces better outcomes. Young Enterprise, MoneyHelper and Barclays LifeSkills are the three most widely evidenced free platforms for this in the UK.
- There is a significant gender, education, income and ethnic gap in financial literacy in the UK of up to 45% when demographic factors intersect, according to research by Bayes Business School and the LFBF. Young women, young people from lower-income households and those who left school at 16 face the highest risk of financial exclusion.
- Seven out of ten young people with the highest level of financial literacy contribute to a pension, and those at the top of the literacy benchmark save significantly more than those at the bottom, according to Wealthify and CEBR research. Financial literacy is not just an education issue. It is a long-term wealth and security issue.
Key terms
| Term | What it means |
|---|---|
| Financial literacy | The ability to understand and use financial skills in everyday life, including budgeting, saving, borrowing, investing and understanding financial products. Distinct from financial knowledge, which is knowing definitions. Financial literacy means being able to apply that knowledge to real decisions. |
| Financial capability | A broader concept than literacy, covering not just knowledge and skills but also motivation, confidence and the habits that lead to good financial behaviour over time. The Money and Pensions Service uses this term in its national strategy because it captures the behavioural element that literacy alone does not. |
| Budget | A plan for how you will spend and save your money over a given period, usually a month. A budget is not about restriction. It is about knowing where your money goes so you can make deliberate choices about it. |
| 50/30/20 rule | A widely used simple budgeting framework. Allocate 50% of take-home income to needs (rent, food, bills, transport), 30% to wants (eating out, subscriptions, leisure) and 20% to savings or debt repayment. Useful as a starting point, though the proportions need adjusting depending on income level and location. |
| Credit score | A number calculated by credit reference agencies (Experian, Equifax, TransUnion) that reflects how reliably you have managed borrowing in the past. Affects your ability to get a mortgage, rent a flat, get a phone contract and in some cases get certain jobs. Building a good credit score requires a history of on-time payments. |
| Emergency fund | A savings pot covering between one and three months of essential living costs, kept in an easily accessible account and not invested. Its purpose is to absorb unexpected costs such as a broken appliance, a car repair or a gap in income without resorting to high-interest borrowing. |
| Interest | The cost of borrowing money, expressed as a percentage of the amount borrowed per year (the Annual Percentage Rate or APR). Also the return earned on savings, expressed as the Annual Equivalent Rate (AER). Understanding how interest compounds over time is one of the most important financial concepts there is. |
| Direct debit | An instruction to your bank to allow a third party to take a specified amount from your account on a recurring basis. Used for bills, subscriptions and loan repayments. You have the legal right to cancel a direct debit at any time by instructing your bank. |
| ISA (Individual Savings Account) | A tax-free savings or investment wrapper available to UK residents. You can save up to £20,000 per year in an ISA without paying tax on the interest or growth. A Lifetime ISA (LISA) lets you save up to £4,000 a year with a 25% government bonus, specifically for a first home or retirement. |
| PAYE (Pay As You Earn) | The system by which income tax and National Insurance are deducted directly from wages by an employer before the employee receives their pay. Most employees do not need to complete a tax return because PAYE handles their tax automatically. Self-employed and freelance workers must complete a Self Assessment tax return instead. |
The state of financial literacy among young people in the UK
The evidence on financial literacy among young people in the UK is consistent and concerning. The London Foundation for Banking and Finance has tracked the attitudes and behaviours of 15 to 18 year olds for over a decade. Their 2025 to 2026 Young Persons’ Money Index, published in November 2025, found that 64% of young people felt anxious about money, and that only 19% could answer basic financial literacy questions. Bank of England Governor Andrew Bailey, commenting on the findings, said they underlined the need for more action.
This anxiety has a direct cost. Research by Wealthify and the Centre for Economics and Business Research found that 7 out of 10 people with the highest financial literacy levels contribute to a pension, and that those at the top of the literacy benchmark save significantly more over their lifetime than those at the bottom. Financial literacy is not an abstract virtue. It translates directly into measurable differences in long-term financial security.
The confidence-competence gap
Mintel’s 2026 UK Financial Education Consumer Report found that 70% of consumers feel positive about their financial knowledge, but only 19% can confidently explain common financial terms. This confidence-competence gap is one of the most significant risks in financial behaviour. People who believe they understand money are less likely to seek help when they need it and more likely to make decisions based on incomplete or incorrect understanding. Financial education that builds genuine competence alongside realistic self-assessment is more valuable than education that simply makes people feel more confident.
Who is most at risk
Research by Bayes Business School and the LFBF, published in January 2025, found that the UK has significant gender, education, income and ethnic gaps in financial literacy of up to 45% when demographic factors intersect. Young women are less financially literate than young men by a margin that is most pronounced in investing and income protection. Young people from lower-income households, those who left school at 16 without continuing to further or higher education, and those from some ethnic minority backgrounds face the highest risk of financial exclusion. The Santander UK research published in January 2025 found that only 26% of young adults report having received any financial education at school, leaving approximately 4 million young people without a fundamental understanding of money management.
What is changing in schools: the 2028 curriculum reforms
Financial education has been part of the secondary school citizenship curriculum in England since 2014. But a decade of compulsory teaching has not produced the outcomes the evidence suggested it would. Research cited in the House of Lords Library briefing on financial education found that the quantity of lessons and the lack of teaching expertise and resources were the primary problems. Many schools taught the minimum required and no more. Some outsourced delivery to financial industry partners with varying quality. The curriculum change was made without the training, funding or assessment framework needed to make it work at scale.
What the 2028 reforms mean in practice
On 5 November 2025, the government published its response to the independent Curriculum and Assessment Review and announced a new statutory requirement to teach Citizenship, including financial literacy, in primary schools from Key Stage 1 onwards. This takes effect from September 2028. Primary pupils will learn about the purpose of money, budgeting, saving, spending and distinguishing needs from wants, as well as risks and responsible financial practice. Secondary education will be strengthened to include more complex content, particularly the digital elements of financial literacy: fraud prevention, scam awareness, online purchases and digital financial tools. The final revised national curriculum will be published by spring 2027, giving schools four terms to prepare. Young Enterprise, which has been delivering financial education programmes in schools for decades, described the reforms as a once-in-a-generation opportunity.
Why the reforms may not be enough on their own
IFA Magazine, commenting on the curriculum review in November 2025, noted that simply adding financial education to the primary curriculum carries the same risks as the secondary reform of 2014: unless teacher training is delivered, expert resources provided, funding made available and the subject assessed, the change in policy will not translate into change in outcomes. Just 1% of UK primary school teachers believe their pupils currently have adequate financial skills, suggesting a significant professional development challenge. Young Enterprise’s response to the review called specifically for the next stage to set out how teachers will be supported with training, resources and dedicated curriculum time. The LFBF described the reforms as a once-in-a-generation opportunity, with the implicit warning that such opportunities have been missed before.
What the evidence says actually works
The research on effective financial education is clear on one point above all others: practical, applied learning beats theoretical instruction. Giving young people real or realistic financial decisions to make, with consequences they can observe, produces better outcomes than teaching definitions of terms or describing how financial products work in the abstract.
| What works | What the evidence shows |
|---|---|
| Applied, practical learning with real decisions | Young Enterprise programmes, which involve young people running real businesses with real money, consistently outperform classroom instruction on attitudinal and behavioural measures of financial capability. The Money and Pensions Service national strategy cites applied learning as the most effective format. |
| Starting early | Research cited in the House of Lords Library briefing finds that financial habits and attitudes form in childhood. By age seven, children have already developed concepts of money, spending and fairness that shape later behaviour. Primary education in financial concepts is more effective at building lasting habits than secondary instruction, because it reaches children before habits are set. |
| Parent and family involvement | The House of Lords Library research found that financial education should not be limited to the classroom. Parents, businesses and the wider community play a significant role. The Interactive Investor survey of 2,000 adults found financial education was seen as the most important factor affecting a child’s long-term financial security. Children who talk regularly about money with their parents develop better financial habits. Only 23% of children frequently talk about money with their parents, according to US research with broadly comparable UK patterns. |
| Normalising money conversations | Financial anxiety in young people is partly driven by money being treated as a taboo subject in many households. Families that discuss income, bills, budgets and trade-offs openly produce young people who are more financially confident and more likely to seek help when they need it. |
| Addressing the emotional dimension | MoneyHelper and YoungMinds both identify the link between money anxiety and mental health as a significant factor in financial behaviour. Education that addresses the emotional relationship with money, including the anxiety that leads to avoidance, produces better outcomes than purely technical instruction. |
The practical skills: what every young person needs to know
Skill 1: Know where your money goes before you decide where it goes
Tracking spending for one month is the most effective single step toward financial awareness. It does not require a spreadsheet or an app. Writing down every purchase for four weeks, or reviewing bank statements at the end of the month, shows patterns that are almost always surprising. Most people discover regular spending on things they had forgotten about: subscriptions, small daily purchases, convenience costs. Awareness precedes change. You cannot budget what you have not tracked.
Skill 2: Build a simple budget using the 50/30/20 rule
The 50/30/20 rule divides take-home pay into three: 50% for needs (rent, food, bills, transport), 30% for wants (eating out, subscriptions, entertainment) and 20% for savings or debt repayment. It is a starting point, not a fixed rule. Someone on a low income in an expensive city may find that needs take 70% or more. The value of the framework is that it makes explicit that savings are not what is left over after spending: they are a planned allocation that comes first. MoneyHelper’s free budget planner at moneyhelper.org.uk/budgetplanner is the best free UK tool for this and does not require creating an account.
Skill 3: Build an emergency fund before anything else
Before paying off debt aggressively, before investing, before anything else, the priority is a small emergency fund. Even £500 in an accessible savings account changes the financial risk profile of a young person significantly. It is the difference between a broken phone or an unexpected bill becoming a minor inconvenience and becoming a debt spiral. The target is eventually one to three months of essential costs. Start with £500. Automate a regular transfer, even £10 a week, so it builds without requiring a decision every time.
Skill 4: Understand how debt works before taking any on
Not all debt is the same. Student loans in England operate differently from commercial debt: repayments are income-contingent, they do not affect credit scores and they are written off after a set period. Credit card debt, buy-now-pay-later agreements and payday loans are commercial debt with compounding interest that can grow quickly if not managed. The key principle is this: never borrow to fund spending on things that lose value. Borrow only for assets that hold or increase value, or for education and training with a clear return. If you do use a credit card, pay the full balance every month. Interest on an unpaid credit card balance at 30% APR doubles the original sum in around two and a half years.
Skill 5: Build a credit score deliberately
A good credit score is built over time through a consistent record of paying on time. The three main ways to start building credit history as a young person are: get on the electoral roll at your current address, which costs nothing and immediately affects your score; open a bank account if you do not have one; and consider a credit-builder card with a low limit, used only for small regular purchases and paid in full every month. Check your credit report for free through Credit Karma, Experian or ClearScore. Errors on your credit file are more common than most people expect and can be corrected by writing to the credit reference agency.
Skill 6: Start a pension as early as possible
The single most powerful argument for starting a pension early is compound interest. A person who contributes £100 per month from age 22 to 32 and then stops will typically have more at retirement than someone who contributes £100 per month from age 32 to 65, because the early contributions have more decades to grow. If you are employed and earning above £10,000 per year, you are automatically enrolled in a workplace pension. The default is to contribute 5% of qualifying earnings, with a minimum employer contribution of 3%. This is a minimum, not a target. Increasing your contribution, particularly when you receive a pay rise, is the most effective way to improve your long-term financial position.
Skill 7: Recognise financial scams and fraud
The new secondary curriculum from 2028 will specifically include fraud and scam prevention as a digital financial literacy skill. This is already urgent. The 2026 Mintel report cited AI-enabled scams and reliance on unregulated advice as two of the fastest-growing financial risks facing young consumers. Scams targeting young people increasingly operate through social media, including investment fraud framed as financial advice from influencers, WhatsApp groups offering high returns, and phishing messages designed to look like bank security alerts. The rule is simple: no legitimate financial institution will ever ask you for your PIN, password, or to move money to a ‘safe account’. If in doubt, call the institution directly using the number on the back of your card or on their official website, not the number given in the message.
For parents and teachers: how to have the conversation
| Approach | What it looks like in practice |
|---|---|
| Make money visible from an early age | Let children see real financial decisions being made. Explain why you are buying a supermarket own-brand product instead of a branded one. Show them a household bill and explain what it pays for. Involve them in comparing prices. Children who observe financial thinking develop financial thinking. |
| Give pocket money with a purpose | Pocket money is most effective as a financial education tool when it requires the child to make real choices, including choices with consequences. Give a fixed amount that covers both discretionary spending and a savings goal. Do not top it up when it runs out. The experience of running out teaches more than any lesson. |
| Use needs versus wants as a daily framework | Needs are things you must have to live and function: food, shelter, clothing, transport to school or work. Wants are things that improve life but are not necessary. Teaching children to classify their spending requests in these terms before asking builds a habit of financial categorisation that persists into adulthood. |
| Talk about mistakes without shame | Adults who are willing to discuss their own financial mistakes, missed payments, debts cleared, bad decisions made and lessons learned, create an environment where young people feel safe asking for help when they get it wrong. Financial shame is one of the main reasons people do not seek help early enough. |
| Connect financial decisions to values | The most durable financial motivation is not fear of debt or ambition for wealth. It is alignment between spending and what a person actually cares about. Helping young people identify what they want their money to do for them, freedom, security, travel, supporting family, learning, produces more consistent financial behaviour than rules or restrictions. |
Practical steps: your financial literacy action plan
| Step | What to do right now |
|---|---|
| Check your spending this week | Look at your last month of bank or card transactions. Categorise them: needs, wants, savings. If you do not have a bank account, opening one is step one. All major banks offer basic bank accounts with no credit check required. |
| Use the free MoneyHelper budget planner | Go to moneyhelper.org.uk and use the free budget planner. No account needed. Takes around 15 minutes. Gives you a clear picture of income versus outgoings and identifies where changes are possible. |
| Open a savings account if you do not have one | A regular saver account at most banks or building societies allows you to set up an automatic monthly transfer. Even £5 a week is £260 a year. Set the transfer to go out on the day after you are paid so you never see the money as available to spend. |
| Check your credit report | Sign up to Credit Karma (free, no card required) or Experian’s free tier to see your current credit score and the factors affecting it. Check for errors. Make sure you are registered to vote at your current address. |
| Check your pension if you are employed | Ask your employer or check your payslip for your pension provider and current contribution rate. Log into your pension account. Check you are contributing above the minimum if you can. If you have pensions from previous jobs, track them through the government’s Pension Tracing Service at gov.uk/find-pension-contact-details. |
| If you are in debt, get free advice first | Do not pay for debt advice. StepChange (0800 138 1111) and MoneyHelper (0800 138 7777) both provide free, confidential, non-judgmental debt advice. Get advice before you agree to any debt management plan, consolidation loan or arrangement with a creditor. |
Free support organisations
| Organisation | What they offer | Contact |
|---|---|---|
| MoneyHelper | Free, impartial money guidance backed by the government. Budget planner, debt advice locator, pension calculator, mortgage affordability tool and a full library of plain-English money guides. Available online, by phone and via webchat. | 0800 138 7777. moneyhelper.org.uk |
| StepChange Debt Charity | Free debt advice and debt management plans for anyone struggling with debt. Online advice tool available 24 hours. Telephone advice Monday to Friday 8am to 8pm, Saturday 8am to 4pm. | 0800 138 1111. stepchange.org |
| Young Enterprise | Delivers financial education programmes in schools and colleges across the UK. Free resources for teachers and young people. Runs the National Money Assembly and enterprise programmes nationally. | young-enterprise.org.uk |
| Barclays LifeSkills | Free financial and work readiness modules for young people aged 14 and above. Covers budgeting, saving, credit, tax and employment. Widely used by schools and colleges. No account required for most content. | barclayslifeskills.com |
| Citizens Advice | Free advice on debt, benefits, housing and consumer rights. Local offices and national phone line. For immediate money or debt issues. | 0800 144 8848. citizensadvice.org.uk |
| MoneySavingExpert | Free guides on every personal finance topic for UK consumers, written in plain English. Martin Lewis’s National Money Assembly resources for young people are freely available. Widely used by schools. | moneysavingexpert.com/family/financial-education |
| Credit Karma | Free credit score and report access. No credit card required. Explains factors affecting your score and shows how to improve it. Available as an app or online. | creditkarma.co.uk |
Sources used in this guide
London Foundation for Banking and Finance, Young Persons’ Money Index 2025 to 2026. Published 27 November 2025. Source for 64% of young people feeling anxious about money, 19% able to answer basic financial literacy questions correctly, and 80% wanting to learn more. Annual survey of 2,000 young people aged 15 to 18.
House of Commons debate, Financial Inclusion: Young People, 30 June 2026. Hansard. Source for the LFBF 2025 to 2026 findings cited in Parliament, and for youth unemployment rising to 16.2% in January to March 2026.
Mintel, UK Financial Education Consumer Report 2026. Published March 2026. Source for the finding that 70% of consumers feel positive about their financial knowledge but only 19% can confidently explain common financial terms, and for AI-enabled scams and unregulated advice as growing financial risks.
Bayes Business School and LFBF, Accelerating Progress: Financial Capability in the UK. Published January 2025. Source for UK financial literacy gaps of up to 45% when gender, education, income and ethnic factors intersect, and for millennials having lower financial literacy than expected.
Santander UK, Financial Education Research Report, January 2025. Source for only 26% of young adults reporting any financial education at school, and approximately 4 million young people lacking fundamental money management understanding.
GOV.UK, New curriculum to give young people the skills for life and work, 5 November 2025. Source for the government’s response to the Curriculum and Assessment Review, the statutory Citizenship requirement from Key Stage 1 from September 2028, and the spring 2027 publication date for the revised national curriculum.
Young Enterprise, response to curriculum review, November 2025. young-enterprise.org.uk. Source for primary curriculum content on the purpose of money, budgeting, saving, spending and distinguishing needs from wants, and for the call for teacher training and support resources.
IFA Magazine, curriculum review response, November 2025. Source for the finding that just 1% of UK primary school teachers believe their pupils have adequate financial skills, and the critique that curriculum change without teacher training funding and assessment will not be sufficient.
House of Lords Library, Financial education in schools, January 2024. lordslibrary.parliament.uk. Source for the history of financial education in the secondary curriculum since 2014, the quantity and quality failures identified in delivery, and the role of parents and community in supplementing school-based education.
Wealthify and Centre for Economics and Business Research. Source for 7 out of 10 people with the highest financial literacy contributing to a pension and those at the top of the benchmark saving significantly more over their lifetime.
MoneyHelper, Supporting yourself financially: a guide for young adults aged 16 to 24. moneyhelper.org.uk. Source for free guidance on budgeting, debt prioritisation, the bill prioritiser tool and the debt advice locator.
Martin Lewis, MoneySavingExpert, National Money Assembly with Young Enterprise, June 2026. moneysavingexpert.com/family/financial-education. Source for the National Money Assembly, streamed live to over 300 schools.
Published by The Knowledge Loop Company | www.theknowledgeloop.com
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