We Teach Young People a Trade, do we Teach them how to make a Living from it?

Think about the young people leaving further education this year. One might be heading to university. Another is starting an apprenticeship. One is going straight into employment. Another has spent two years developing the technical skills to become a hairdresser, electrician, chef or personal trainer and is already thinking about working for themselves.

We spend a huge amount of time making sure those young people are ready for their next step. But are they financially ready for it?

Could they read their first payslip and explain why the amount arriving in their bank account is different from their salary? If they started earning money for themselves, would they know what they needed to do about tax?  Would they know what a Self-Assessment tax return is, what records they needed to keep or why turnover and profit are not the same thing? And if they were asked what their time was worth, would they have any idea how to work it out?

These aren’t questions for some distant point in adulthood. For FE learners, they are often questions for next year, next month or even next week. This is a key conversation about the role of financial literacy in further education.

The Department for Education is clear that 16–19 provision should prepare young people for progression into further study, higher education and employment. The Money and Pensions Service has highlighted the importance of financial capability as young people approach independence. One of its findings is startling; almost six in ten 14–17-year-olds were unable to correctly read a payslip.

For too long, financial education has been synonymous with budgeting. Budgeting matters, of course. So do saving, borrowing, debt and understanding the difference between what we want and what we can actually afford. But there is another side of financial literacy that we talk about far less: earning money and understanding what happens when you do.

We could have a young person who is technically ready to enter the workplace, has achieved their qualification and successfully secured an apprenticeship – but doesn’t understand the piece of paper that tells them what they have earned. There is a disconnect there. And it becomes even more obvious when we look at the range of pathways our learners take.

For a young person heading to university, the immediate questions might be about student finance, accommodation, budgeting independently and understanding the financial commitments they are making. For someone moving directly into employment, it might mean being able to look beyond the headline salary when comparing two jobs. What will they actually take home? What benefits are included? What pension contribution is being made? And for the future plumber, beautician, photographer, designer, chef or personal trainer, the conversation needs to include self-employment, tax, invoicing, expenses, pricing and cash flow. The financial knowledge required at each of those points changes.

We rightly teach the technical skills required to do the job well. But knowing how to do the job and knowing how to make a living are not the same.  Entrepreneurship can’t just be an exciting business idea and a logo. We are very comfortable telling young people to be ambitious. We want them to innovate, create businesses, spot opportunities and perhaps become their own boss.

As self-employed, if you charge a customer £40, how much of that £40 is actually yours? What about equipment, products, premises, insurance and travel? What happens when there are fewer customers next month? Young people need to understand how to price something, how to invoice someone, how to keep records and how to work out whether they are making a profit or loss. They need to know what a tax return is before the first one lands in front of them. They need to understand that a successful month doesn’t necessarily mean they can spend everything sitting in their account. That is financial literacy too. Concepts such as tax, National Insurance, expenses, invoices, pricing, profit and cash flow aren’t dry financial terminology.

With Build & Conquer Financial Literacy we have developed a progressive financial literacy curriculum because financial education should not depend on a one-off enrichment day, an assembly or whether an individual teacher happened to feel confident talking about money. We wanted an entitlement.

And importantly, we want that entitlement to grow with the young person and the education  or employment pathways they take. Same entitlement. Different context.

Financial literacy becomes much more powerful when learners can see why it matters to their future, rather than experiencing it as a generic life-skills lesson. Financial knowledge isn’t distributed equally. That isn’t about making assumptions about particular families or groups of learners. It is simply recognising that young people arrive in our classrooms with different experiences and different prior knowledge. Some young people grow up hearing conversations about salaries, mortgages, pensions, investments, tax and running businesses. Others do not.

Education has the ability to do something about that. If we make financial literacy an entitlement, rather than something young people acquire by chance, we remove some of that variation. And FE is the most exciting place to do it as the learners are close enough to adult life for the learning to be real.  Being employed is not an abstract business studies case study. That immediacy gives FE practitioners an opportunity. Because ultimately financial literacy isn’t really about knowing financial terminology. It is about having enough knowledge and confidence to make decisions and to take control of your own financial future.

When a learner leaves FE ready to make a living, have we also taught them how to manage one? If the answer is no, then the entitlement to vital skills and knowledge from their education journey are missing.

By Aimee Williams, Director of Education at Three Spires Trust; Meena Wood, Chair of Advisory Board of Build and Conquer Financial Literacy and Sharan Kaur Varaitch, founder of Build & Conquer Financial Literacy