Empowering Marginalised Communities Through Financial Education

Financial literacy is a crucial life skill that can empower individuals and communities alike to achieve greater economic independence, build financial security and break the poverty cycle. However, for many marginalised communities access to financial education and resources remains limited.

This level of financial exclusion is a deeply entrenched issue that affects many marginalised communities. A survey of over 3,000 people revealed significantly lower levels of financial literacy within deprived areas and amongst the young, women and ethnic minorities. These individuals often lack access to banking services, affordable credit, and essential financial knowledge, leaving them vulnerable and unable to make informed financial decisions.?

The consequences of financial exclusion are far-reaching, hindering economic growth and perpetuating inequality. Breaking free from this cycle requires us to address the root causes of financial exclusion, and that is where financial education comes into play.

In the UK, financial literacy falls short of the rates observed elsewhere in the Organisation for Economic Co-operation and Development (OECD), within which it is ranked 15th of 29 OECD countries, and a recent study reported that 88% of people don’t feel confident in their own financial literacy skills. Unfortunately, marginalised communities are especially impacted by these poor rates of financial literacy.?

A study by St James Place found that the financial skills of 15-year-olds from socio-economically disadvantaged backgrounds are similar to 11-year-olds from the most advantaged backgrounds, clearly demonstrating that marginalised communities are falling behind. It also comes as no surprise that a lack of financial education disproportionately impacts Britain’s poorest families and children, making it even more challenging to break the poverty cycle.?

The positive impact of financial education has been clearly demonstrated. A study by GoHenry found that prioritising financial education could add nearly ￡7 billion to the UK economy each year. Better money management skills have been shown to reduce debt in socially deprived areas and improve household net worth, and nearly 70% of UK adults say better financial education would have increased their ability to manage their finances.

Although financial education is on the UK school curriculum, it remains a neglected subject despite evidence to show that it has huge potential for early intervention and maximum positive impact. According to research, 90% of people polled across England learnt “nothing at all” or “not very much” about finance at school.

There are some initiatives aimed at improving levels of financial education at school age. For example, as recently as June this year Santander UK and international online educational publisher Twinkl have launched the Financial Education Recognition Scheme for UK schools that commits to improving financial education in schools.? Charities such as The Money Charity host workshops specifically designed to engage young people in learning about money management and improving their confidence with money.??

Other initiatives have focused on working with adults. The Financial Times has launched the Financial Literacy and Inclusion Campaign, which they are using to target women and marginalised communities in particular. Importantly, this campaign recognises that certain barriers to accessing financial education need to be addressed amongst many marginalised communities. Even when financial education is available, barriers such as language, cultural nuances, and low digital literacy can all hinder the dissemination of such knowledge. The Financial Literacy and Inclusion Campaign has addressed this by using educators who can speak multiple languages and other such strategies.?

Another initiative has been launched by The Money & Pensions Service UK. Since launching The Strategy for Financial Wellbeing in 2020, they have worked with hundreds of partners from across government, industry and the third sector to help improve the financial literacy skills of marginalised communities.?

However, it’s important to remember that financial education is so much more than just sharing cold hard knowledge of money management and wealth creation. It’s also about equipping individuals with the confidence to execute on such knowledge. For marginalised communities, financial education can be transformative, breaking the cycle of financial exclusion and vulnerability. Understanding budgeting, saving, credit management, and investment options empowers individuals to take control of their finances, plan for the future, and work towards financial independence.

While strides have been made in promoting financial education, there still exists a significant gap in financial knowledge and access, particularly among marginalised communities. Empowering these communities through financial education is not only a matter of social justice but also a pathway to economic growth and stability. However, despite evidence that improved financial literacy supports everyone and has a clear positive ripple effect, initiatives to improve levels amongst marginalised communities do seem few and far between. It would be encouraging to see more initiatives focused on improving this area in the future.?

Summary

• Financial literacy is a critical life skill that can empower individuals and communities, but access to financial education is limited in many marginalised communities, hindering economic independence.

• The consequences of financial exclusion are widespread, perpetuating inequality and hindering economic growth. Furthermore, the positive impact of higher levels of financial education have clearly been demonstrated.?

• There are a number of initiatives focused on improving financial literacy amongst marginalised communities in the UK but it still remains an under-served social issue.?

• Although improving levels of financial literacy amongst marginalised communities will go a long way to helping close the wealth gap, there are other key contributing factors that also need to be taken into account.?