The Salary Calculator

Personal finance education in the UK

by Madaline Dunn

Although personal finance is now an educational requirement in the UK, it’s well known the curriculum around this topic is not up to scratch. Many leave school without a real grasp on the ins and outs of personal finance, whether that’s interest rates, mortgages, or managing money, and as a result, research shows this leaves youngsters vulnerable to making harmful decisions around their finances.

Financial literacy empowers people to make informed choices about how, when and where they spend their money, and ensure they’re not left open to unsustainable borrowing, and unwise investments that could lead them down a road of debt.

At The Salary Calculator, we’ll explore why education around personal finances in the UK needs to improve, and the consequences of financial illiteracy.

A lack of financial literacy and its consequences

According to research, we begin to develop “vital money habits and skills” between ages three and seven. Despite this, only around 38% of children and young people receive some form of financial education while in school, and in 2016, half of Brits failed a financial literacy test run by the OECD, placing Britain significantly below France, Norway and Austria.

The consequences of this lack of financial literacy, means that young people are largely unprepared to deal with the different financial situations they are confronted with as they move into adulthood.

Research from Santander UK has even found that two-thirds of young people attribute their debt problems to a lack of financial education. Meanwhile, an inquiry commissioned by the Centre for Social Justice (CSJ) in partnership with Lowell, found that 24 million adults are not confident handling their money on a day to day basis, and one in eight young adults who took on a “buy now, pay later” credit agreement were eventually contacted by a debt collector.

Speaking about what the Santander UK study shows, Mike Regnier, CEO of Santander UK, said that fostering key money management skills at “an early age” will ensure that future generations leave school “equipped with the foundations for financial independence, and the skills to make better financial decisions.”

Meanwhile, John Pears, UK Chief Executive at Lowell, said that now, more than ever, with the cost of living crisis reaching extreme levels, financial literacy would be a “strong barrier.” Pears admitted that as a country “we just aren’t good enough at it,” and outlined that the company’s own customers have outlined how “ill-prepared” they are when facing debt. He added: “The lack of financial literacy and budgeting skills creates spirals of debt that are hard to break and have a long-lasting impact, individually and on our economy.”

Education around personal finance should start at school

The CSJ and Lowell conducted a poll of 4,000 adults and found that 44% of all adults, and two-thirds of those aged 18 to 34, believe that if they had received financial education, for example around basic money skills, they would be more financially prepared for life and its challenges. Yet, in the 2021-22 Young Person’s Money Index report, just 8% of young people said they received most of their financial education at school.

Yet, according to Fintec, when children receive education around finances at school, they’re more likely to handle their finances better, save up frequently, have a bank account and generally feel more confident navigating finances.

Speaking about the advantages of educating children about finances from a young age, Martin Lewis, the founder of MoneySavingExpert.com, said that children are “professionals at learning.” He added: “Teaching children is easier than teaching adults. That’s why, in our education campaigns, we focus on children –  because the job of educating society is so much bigger. If you start with children and keep doing it over 30, 40 years, you’re going to work through [society] better.”

Programs and initiatives to enhance education

Back in 2014, financial education was brought into the secondary school curriculum, as a component of the “citizenship” element of the national curriculum at key stage 3 and 4. This was introduced as a way of providing students with guidance on managing money, and tools to plan for their future financial needs.

However, despite being compulsory, uptake of financial education in schools is actually quite low. According to Russell Winnard, a former teacher and head of programmes and services at Young Money, there is room for improvement in this area. In 2017, he outlined: “It is compulsory in every secondary school, though that does not apply to academies and free schools. Around 35% – 45% of schools were actually delivering financial education in 2014. Two years on and we estimate it’s still only 40% doing so.”

This is something that has been echoed more recently by Martin Lewis who expressed similar sentiments. Speaking to Future Learn, Lewis said: “There is financial literacy on the national curriculum, but it’s guidance rather than compulsory for many schools. It’s only on the curriculum for secondary schools in England. We have a charity called Young Money where we have a free financial education textbook in every school now, and that’s been incredibly successful, but we still have a problem that some schools don’t teach it, aren’t trained to teach it and won’t.”

To tackle the financial education gap, a number of recommendations have been made by CSJ. Some of these recommendations include:

• Introducing a new legal requirement for students to receive “at least three ‘experiential’ financial learning lessons” over the course of their school career;
• A new ‘whole-family’ approach to financial education. According to the report, this would involve bringing in parents and carers into the equation, and introducing what the CSJ called community infrastructure like Family Hubs;
• Bringing in funding for care leavers and disadvantaged young adults to attend ‘just-in-time’ financial education programmes to reduce cases of rent-arrear driven homelessness;
• Introducing adult financial education as part of the Government’s £560 million adult numeracy scheme, ‘Multiply’;
• Completing of the welfare reforms initiated in 2012 by rolling out ‘Universal Support’ to provide vulnerable people with digital and financial skills;
• Promoting the ‘Help to Save’ scheme to increase uptake among those who are eligible.

Commenting on the changes that need to be implemented, Robert Halfon MP, Education Select Committee Chair, said: “We must be bolder – critically, by adding financial education to the curriculum in primary school in PHSE lessons where money management remains absent in England. Adults of all ages also need opportunities to develop critical financial skills throughout their life, whether that be in the workplace, further education or via the welfare system.

Tags: Economy, Finances, Financial education, Managing money, Personal finance

Coping with financial challenges: Ways to save money in 2022

by Madaline Dunn

These days, almost everyone is feeling the pinch. According to recent research from the Food Standards Agency (FSA), more and more people view affording food as a concern and over three-quarters of UK consumers (76%) have voiced their unease.

Likewise, BritainThinks also found that the cost of living is now the dominant concern for UK households, with rising prices being a major concern for 90% of people. Shawbrook Bank even found that around 18% are already losing sleep over their concerns around money, and a quarter of those surveyed cited managing their finances as the primary cause of their stress.

At The Salary Calculator we understand how difficult it can be to cope with the cost of living crisis, and have compiled a list of ways to save money when faced with financial challenges:

• Access to food banks 
• Free sanitary products and contraceptives
• Baby food & formula
• Toys & Books

Access to food banks

Recent research has shown that over 22% of people surveyed by the FSA, as a result of financial struggles, have been forced to either miss a meal or reduce the size of their meals. It will come as little surprise then that people’s use of food banks has risen dramatically, with the number of those turning to food banks increasing from around one in 10 in March 2021, to almost one in six this March. 

Speaking about this, Prof Susan Jebb, chair of the agency, said: “In the face of the immediate pressures on people struggling to buy food, food banks are playing a vital role in our communities.” That said, you may be in the dark about how to go about accessing a food bank, but don’t worry, we’ll explain. To begin with, you’ll need a referral – you can start the ball rolling through accessing your local Citizens Advice. Once there, you’ll be asked about your personal circumstances and they will determine whether you’re eligible. That said, if you’re unable to get a referral this way, you can ask an organisation/body that you’re receiving support from, this could be a social worker, school staff, or GP.

Once you’ve received a referral, you’ll be given food vouchers for a food parcel containing three days’ worth of non-perishable food. Alongside the food parcel, you’ll also be offered advice on finance, debt, and government support. 

Sanitary products & contraceptives

Period poverty in the UK is alarmingly widespread. A recent survey in the UK uncovered that one in four girls and women aged 14-21 (28%) are struggling to afford sanitary products and almost one in five (19%) have been unable to afford these at all since the beginning of 2022.

With a lack of access to sanitary products, these women and girls have been forced to use substitutes such as ​​toilet paper (80%), socks (12%), newspaper/paper (10%), or another kind of fabric (7%). 

Commenting about the horrific situation many women and girls are facing, Rose Caldwell, CEO of Plan International UK, called the findings “devastating.” She said: “As we look to an uncertain future, many more families will face tough financial choices, and more young women than ever are likely to face issues affording the products they need,” she said. “Period products are a necessity, not a luxury, and they need to be treated as such.”

However, while we wait to catch up with Scotland, which is now the first in the world to have made period products free, there is assistance for those facing period poverty. Food banks now stock sanitary products, and you can find your local food bank through the Trussell Trust website which contains a directory of nationwide food banks. In some cases, you won’t need a referral. The supermarket Morrisons has a scheme where those in need can get free sanitary products by asking for a package for Sandy. Bloody Good Period, Period Poverty, Freedom4Girls and Hey Girls can also provide help.

When it comes to contraceptives, you can access them for free from the following: 

• Contraception clinics
• Sexual health or GUM (genitourinary medicine) clinics
• Some GP surgeries
• Some young people’s services
• Pharmacies

It’s also important to note that contraception services are free and confidential, even for those who are under the age of 16.

Baby food & formula

If you’re facing financial hardship and you are pregnant or have a child under four years of age, you may be eligible for assistance buying food and milk. This can be accessed through the NHS’s Healthy Start program,  where and if eligible, you will be sent a Healthy Start card with money on it, which is updated with funds every four weeks, so you can use it to buy:

• Plain cow’s milk
• Infant formula milk (based on cow’s milk)
• Healthy Start vitamins
• Vitamin drops 
• Fresh, frozen, and tinned fruit and vegetables
• Fresh, dried, and tinned pulses

There are also specialist “baby banks” which are run by local organisations and charities dotted across the UK. Through baby banks, you can access nappies, wipes, baby food, clothes, toiletries, toys, cots, sterilisers, baby baths, and medication. Some active baby banks include London-based organisation Little Village, Baby Basics, and The Nappy Project. 

To find out where your local baby bank is, reach out to Citizens Advice and Trussell Trust, or use Little Village’s interactive baby bank tool.

Toys & Books

While there are a fair few options available for food, drink and sanitary products, you may be wondering if there are organisations, charities, or schemes that can help you access toys and books for your youngsters. After all, a Gingerbread survey found that when looking to make cuts to spending, toys, books and games are often cut out first to make ends meet (52%).

When it comes to accessing books, BookTrust is the UK’s largest children’s reading charity, and entitles every child in England and Wales to a free Bookstart pack before they are 12 months old and again aged 3-4 years ( or 27 months old in Wales).

Likewise, for access to toys, you may find it helpful to look into toy libraries, which are exactly what you’d expect them to be, libraries where instead of borrowing books, children can borrow toys. There are more than 1,000 toy libraries around the UK, and yearly membership is low, costing as little as £3 per family for a year pass. Typically, toys can be borrowed for up to two to three weeks.

Tags: cost of living crisis, Economy, Finances, food banks, Personal finances

How the cost of living crisis is affecting the job landscape

by Madaline Dunn

The ongoing cost of living crisis appears to be an endless one. Living standards face their largest fall since the mid-1950s. Millions are being faced with dire financial situations and around 1.3 million are confronted by “absolute poverty.” As the situation worsens, many are desperately searching for a solution, and some are looking toward switching jobs as the answer. 

That said, some experts are warning that the grass is always greener on the other side, and that while workers may be lured in by higher-paying salaries, switching now might hurt them in the long run. 

At the Salary Calculator, we’ll explore:

• How the cost of living crisis is affecting jobs
• How switching jobs may benefit you
• What to watch out for when thinking of exploring a new position

Cost of living crisis encourages job switches

Research conducted by Totaljobs has found that more and more people are looking for new job opportunities to help support them through their financial woes caused by the cost of living crisis. The UK job found that workers’ salaries are increasingly squeezed, and 47% are now living from payslip to payslip. 

Despite the ongoing financial challenge faced by many, nearly half (48%) have not received a pay rise, and those who did (42%) saw a rise that failed to meet the current rate of inflation. This has pushed 17% of workers to take on another job to supplement their income; meanwhile, 30% are taking on additional shifts. If you are one of the people thinking about taking on a second job, at The Salary Calculator, we can help you calculate your total take-home, just head over here.

For many, though, the crisis is pushing them to look further afield. Now, nearly 40% (37%) are looking to change lanes and find a new job. Those who were classified as essential workers were twice as likely to have to leave their jobs and move into a new sector due to higher wages. 

Commenting on the figures, Jon Wilson, CEO of Totaljobs, said that key workers were those who suffered most, despite the fact society “couldn’t have functioned without them” during the course of the pandemic. “This research illustrates that everyone is feeling the pinch of the rising cost of living – yet it is disproportionately felt by our key workers – to the extent that some are looking to move jobs for one that provides them with more financial security.”

Research from PricewaterhouseCoopers (PwC) has also uncovered that nearly one in five employees intends to leave their current jobs and find a new role within the next year. A further 16 per cent plan to leave the workforce on a temporary or permanent basis. Similarly to Totaljobs, the research, which considered responses from over 2,000 people in the UK, found that the main motivation for switching job roles was pay (72%).

The benefits of making the change 

Research from the Office for National Statistics (ONS) last year, revealed that those who switched jobs saw a pay increase of 6.6%. That said, the figures show that the size of the rise was dependent on sector and experience. 

Pay growth for those in the arts, entertainment and recreation sectors hit 21%, meanwhile, for those working in information and communications, the increase was one percent lower (20%). While employees working in these sectors saw significant salary growth, the research showed that the increase was even higher for those who moved to a new industry; overall median earnings growth in this scenario stood at 2.1 percentage points higher. 

For those with more years of experience within their sector, the benefits of a switch were also greater, with average earning growth in this bracket at just over 16%.

If you’re considering switching jobs, head over to this page to compare your current salary with the salary offered by a potential new job.

What do the experts say?

While there are certainly financial benefits to be had from a job switch, it’s important to note that it’s not all sunshine and roses. Some experts have said that switching jobs for financial reasons may mean less stability, and a loss of statutory rights. From a broader perspective, some have also noted that switching jobs regularly might make it more difficult to keep track of one’s pensions and ensure one is keeping up with one’s levels of pension contributions. 

Sarah Coles, a senior personal finance analyst at Hargreaves Lansdown, outlines: “The grass is slightly greener on the other side of the fence, but the ground may be less stable.” Adding: “Switching jobs will boost your pay by an average of 6.6%, and switching industries, occupations or regions at the same time can have an even more dramatic effect. But before you jump the fence, you need to know what you’re giving up.”

Discussing the impact of switching jobs on pensions, Helen Morrissey, senior pensions and retirement analyst at Hargreaves Lansdown, comments: “You may have a job where pension contributions are above the auto-enrolment minimum, say 12%. If you then left that job the next role might only come with an 8% contribution, and if you don’t take action to increase your contribution back up to this level, then you will likely see a significant shortfall by the time you hit retirement. As we move jobs more often care needs to be taken that contribution levels are maintained wherever possible.”

Morrisey continues: “In addition, regular job moves increase the likelihood that you will lose track of pensions from previous employers. You may misplace paperwork or stop receiving documents because you moved house and didn’t update your details, or your provider might change name making it harder to track down.”

Tags: 2022, cost of living crisis, Jobs, Pensions