Children to get lessons in how to manage their money - and to avoid debt

Schools Secretary Ed Balls aims to halt the rise in the number of students who leave school financially illiterate.

Two-thirds of adults have trouble with basic financial terms and are ignorant about investment opportunities, according to research.

Analysts say consumers lose more than £10billion a year after buying financial products that don't suit them, while personal debt has risen to a record £1.325 trillion.

Mr Balls will on Thursday order secondary schools to teach career progression, personal finance and enterprise as part of the National Curriculum "to better prepare pupils for adult life".

He will argue that youngsters must be made "better-informed consumers" who learn to manage their money and finances effectively.

"It is essential that we equip our children with the financial skills they will need as adults and get young people thinking about careers and how to fulfil their ambitions," Mr Balls said yesterday.

"Money plays a crucial part in all our lives. I want youngsters to start learning early how to make the most of their money and savings once they start work.

"Schools have a vital role to play in encouraging young people to improve their chances of a successful career, understand about taking risks and develop a dynamic 'can do' attitude.

"They need to understand everyday issues such as opening a bank account, buying a house and saving for their retirement as early as possible, developing a sense of responsibility as citizens."

Ministers hope to use child trust funds as the starting point for financial education. This September, every five-year-old entering school will have a fund for the first time.

Every child born since September 1, 2002, has received a £250 voucher from the Government to kick-start their fund. Those from poorer families get £500.

Youngsters will also learn about the role of taxation, personal budgeting, money management, personal savings and a range of financial products including pensions, interest rates, trade and investment.

They will be taught particularly about career progression and the attitudes and skills sought by employers as well as about enterprise and how to manage risk.

The Conservatives said financial literacy should be taught in schools to children between the ages of 11 and 18 last year.

Present Government policy of adding an element of financial education to the GCSE maths curriculum was inadequate, they said.

The new curriculum for secondary schools will also propose lessons in British values. Citizenship classes will cover national, regional, ethnic and religious cultures.