How do you measure the effect of financial education on young people.

With difficulty.

That’s the dominant thought as you read through an “evidence of impact” study just published by the Financial Services Authority.

It’s a longish document that presents an overview of financial education evaluations. Two things stand out.

• Those in the business of financial education believe that evaluation matters. If you can’t measure it, it ain’t happening. You must have evidence that what you are doing has an impact on young people’s behaviour. If not, it is pointless committing resources to it.
• There isn’t much evidence around. Evaluations are thin on the ground. What evidence there is isn’t particularly robust.

Anyway, the Financial Services Authority and the national strategy for financial capability are still plugging away. That’s to their credit. As is the fact that young people not in education, employment or training (neet) are one of the target groups.

Meanwhile, here’s a short form of some relevant highlight:

Young people do not acquire a lot more financial knowledge from education. A Jump$tart survey in the US was one of the few to measure knowledge. It found that teenagers who received personal finance education do not appear to be any more knowledgeable than those who have not. Expect rapid increases in knowledge among much younger children. But not among teenagers.

A lot of stuff happening in young people’s financial lives makes the impact of financial education pretty hard to identify. As teenagers become adults, they start to gain access to credit and have larger incomes and responsibilities to manage. That overwhelms any changes in behaviour as a result of financial education. If you want to measure the success of initiatives aimed at young adults you must have a sensible control group.

For neet young people to learn about financial topics such as budgeting, it helps if a small number of messages are repeated on different occasions. It is also important to have trusted adults working with this group of young people.

A range of delivery methods are needed to train youth work professionals in financial education.

Evidence of impact: An overview of financial education evaluations (link straight to pdf) was written by Adele Atkinson at the Personal Finance Research Centre, University of Bristol.

The coming year’s intake of university students will be considering such offers, dangled by the high street banks as they compete for custom. Alongside such lollipops are duller financial matters, including the varying interest rates paid on current account balances. Arguably more relevant to students, is the size of the interest-free overdraft on offer.

The price comparison websites, such as money saving expert, money supermarket, and the review centre students accounts are sources for advice on the best offers.

Choosing financial products is a key part of financial literacy. But there are others that may be of greater value to students. The basics of being able to make ends meet, keeping track of finances and planning ahead are, ultimately, far more important to individuals than these introductory offers.

Students might be best advised to visit their university’s student financial centre, if there is one. Some offer a money doctor service, a project operated by the Financial Services Authority which aims to help those managing their finances for the first time.

The toolkit used by money doctors is available online. Good bunch of icebreakers, budgeting tools, activity ideas and case studies.

Anyway, it’s the words that matter, not the pretty pictures. In this case, the content is about financial advice for young people. Specifically, it is about what you can and cannot do & say under laws relating to financial services regulation.

The point is that some forms of financial advice-giving and other activities are regulated by the UK’s financial watchdog. If you recommend an insurance product, or an investment scheme, you must be authorised to do so by the Financial Services Authority.

If you are running sessions on money at a local youth centre, you might discuss insurance. That’s fine. But if you suggest that young people take out a particular company’s motor insurance and give them their leaflet – you’ve overstepped the mark.

If young people ask, can you talk about the financial products you personally have – tell them where your savings account is, or who you got a loan from? Yes. Provided that you don’t recommend them in preference to others.

Can you give out contact details for financial firms? Again, yes. Provided that you don’t recommend a specific firm over others.

The FSA has produced a handy leaflet designed for anyone giving simple guidance, help or advice on money matters. The gist is that giving general advice is fine. So is talking about the merits of and demerits of different types of product. But recommending particular companies or services is something to avoid.

Here’s a copy of the leaflet, Giving guidance about money matters – top tips, as a pdf.