Let’s put financial literacy on the breakfast menu

This article is part of the FT’s Financial Literacy and Inclusion Campaign joint seasonal appeal with Magic Breakfast

I’ve been getting into the Christmas spirit this week, and thought the holidays would be the perfect time to introduce my twin nephews to the joys of Monopoly.

I fondly remember the marathon games of my childhood, clutching a wodge of pink £500 notes and extracting rent from my brother if he had the misfortune to land on Mayfair.

But when I went online to buy his children their own board, I was stunned to see that a totally cashless version is now available. No more Monopoly money! Instead, players have contactless cards which they tap on a digital banking unit to buy property, pay fines or view their balance.

A sign of the times, my first reaction was one of dismay. The counting and checking of paper notes is more time consuming, but arguably better for boosting numeracy skills. Similarly, seeing a cash pile grow or dwindle offers a much more tangible experience of the consequences of taking risks with your money than a digital display.

But in real life, tapping cards (or phones) to pay for things is now the norm, and I strongly suspect children will love this modern update. So I’m giving it a spin, and hope to ram home the message of making sure they’ve got enough in their digital account before committing to tap and pay.

Training children to use contactless bank cards responsibly is an important life lesson. Customers of NatWest, Starling and Revolut can set up free pre-paid debit cards with corresponding apps for children as young as six to save and spend their pocket money with no notes or coins in sight.

A scary thought, perhaps, but letting them explore the increasingly digital world of money in a controlled environment will better prepare them for even greater risks that lie ahead. Laying the foundations of digital financial literacy early on could help them understand the consequences of tapping or clicking other digital services such as buy now, pay later or the addictive allure of pay-to-play online gaming.

It could hopefully cause them to question “get rich quick” investment schemes peddled on social media, and resist being recruited as a “money mule”.

Not all parents are capable or confident of guiding their children through the digital financial jungle, and the school curriculum currently has woefully little to prepare them. This is where the FT’s Seasonal Appeal is hoping to make a real difference.

This Christmas, the FT’s Financial Literacy and Inclusion Campaign (Flic) has teamed up with another charity, Magic Breakfast, to provide secondary school pupils in deprived areas with a healthy breakfast and financial skills training on the side.

By providing both of these crucial elements, our “Feed the Future” campaign aims to improve the life chances of students from less affluent backgrounds. Studies show that students who eat breakfast regularly perform better academically. And as a trustee of Flic, I have seen first hand how teenage students devour financial lessons from our free-to-use school curriculum, with videos and resources designed to make this easier for time-pressed teachers.

If our joint campaign can raise £1mn this Christmas, this would feed the bellies and curious minds of 10,000 students for a whole year.

Flic’s curriculum includes bite-sized modules on banking, budgeting, tax and inflation suitable for 11 to 18-year-olds. But FT readers’ generosity is also helping Flic to fund more in-depth sessions with older students, including our highly popular investment simulation session.

“First, we set the context by making sure students understand what stocks and shares are, then we look at different investment strategies and how these might suit people with differing risk profiles,” explains Chantelle Clarke, Flic’s head of content and a former secondary school teacher.

Just like Monopoly, students get to play with virtual money. They are assigned a character with a particular goal in mind, and must allocate £2,000 of capital between eight potential investments. Then the clock starts ticking, and we simulate what might happen to their portfolio over the next 10 years.

The initial euphoria of seeing their investments grow in value is brought crashing down to earth when a series of “news flashes” start to appear, imperilling their choices. Students must rapidly decide whether to react, and experience the consequences.

“They get used to the emotions of investing; they learn about the risks of taking a gamble or not being diversified, and see how they can turn losses around if they take a longer-term view,” she explains.

Much closer to real life than Monopoly, the simulation is also an important counterweight to the unregulated crypto investments students of this age will undoubtedly have been exposed to.

I have seen for myself how powerful other real-life money lessons are for teens on the cusp of taking on adult responsibilities. Flic content about budgeting and the cost of living is especially popular. Unlike Monopoly, it’s not just about paying the rent. Students often exclaim “What’s council tax?” and “What! You have to pay for water?”

They are also educated about the risks of being coerced into money laundering by allowing their bank accounts to be used to siphon off the proceeds of online crime. Once a young person is ensnared in this web of criminality, it is hard to escape, and gangs will threaten them into recruiting friends. Yet money mules are more likely to be caught than the fraudsters.

As well as risking a criminal record, they could end up being unbanked, which carries lasting consequences in our increasingly digital world. Victims typically cannot open another bank account for many years, meaning they cannot receive student loan payments or obtain any form of credit, including phone contracts.

Providing preventive education about these dangers is just as crucial as public health issues such as teen pregnancy.

“Creating awareness gives young people the confidence in these moments to say ‘have you got a condom?’ because they understand the consequences of not doing so,” Clarke says. “Why aren’t we doing this for financial risks?”

Evidencing the link between financial education in childhood and financial capability in adulthood is key to Flic’s mission. All of the work the charity conducts in schools is generating valuable evidence via longitudinal studies to help researchers prove this, which we believe will only strengthen the case for financial education in the future.

By supporting Flic and Magic Breakfast this winter, readers can provide a lasting gift for children that will resonate for many Christmases to come.

Claer Barrett is the FT’s consumer editor and the author of ‘What They Don’t Teach You About Money’. claer.barrett@ft.com Instagram @Claerb