Why the National Curriculum must include financial literacy

As a primary school teacher in the UK, I see the curiosity of Key  Stage 2 (ages 7–11) pupils, eager to understand their world. Yet, the  Personal, Social, Health and Economic (PSHE) curriculum fails to equip  them with essential financial literacy skills. In an era of economic  volatility, persistent inflation, and escalating national debt, it’s  critical to update the Key Stage 2 PSHE curriculum to include  comprehensive financial education.

Children  must learn what money is, who controls it, how it is created, and how  inflation erodes purchasing power over time. The meme “Your money in the  bank isn’t yours, isn’t money, and isn’t in the bank” captures the  complexities of modern finance, while insights from Lyn Alden’s Broken Money, Jeff Booth’s The Price of Tomorrow, and Saifedean Ammous’s The Fiat Standard highlight systemic flaws. 

Moreover,  many adults lack these concepts themselves, as evidenced by widespread  misunderstanding of inflation’s impact, such as the Bank of England’s 2%  target eroding savings’ value. Supported by Office for National  Statistics (ONS) data and public finance reports, I argue that embedding  financial literacy in the curriculum is urgent to prepare children for a  world with an uncertain financial future.

Decoding the Meme: “Your Money in the Bank Isn’t Yours, Isn’t Money, and Isn’t in the Bank”

The  meme “Your money in the bank isn’t yours, isn’t money, and isn’t in the  bank,” highlights the complexities of modern banking which are not  truly understood by many adults. Unpacking this simple phrase for  children during their formative interactions with fiat money —currency  not backed by commodities— will create a solid foundation as they  progress through education to becoming productive members of society.  Children, and their parents, need to grasp that your money in a bank:

• Isn’t yours:  Deposits legally belong to the bank, with you as a creditor, protected  only up to £85,000 per person per institution under the Financial  Services Compensation Scheme (FSCS). Alden and Ammous note that  fractional reserve banking, a fiat hallmark, allows banks to lend out  more than they hold, creating risks. Many adults are unaware of this,  assuming deposits are “theirs” in a vault.

• Isn’t money:  Bank balances are digital promises, not cash. Ammous explains that fiat  money is mostly debt created by bank lending, with over 90% digital,  per Alden. Adults often misunderstand this, treating account balances as  tangible wealth.

• Isn’t in the bank:  Banks lend out most deposits, keeping minimal reserves (often under  10%). Ammous critiques this as a fiat-driven distortion. Adults may  believe their money is physically stored, not circulating as loans.

This meme highlights concepts  many adults miss, underscoring the need for Key Stage 2 lessons to teach  children what adults struggle to grasp.

The Case for Financial Literacy at Key Stage 2

The  current PSHE curriculum skims economic education, offering  non-statutory guidance on budgeting but neglecting the nature of money,  monetary policy, and inflation’s long-term effects. This leaves children  unprepared for a complex financial landscape. Lyn Alden’s Broken Money argues that the debt-driven monetary system fuels inflation and inequality. Jeff Booth’s The Price of Tomorrow notes that the technological advancements which should lead to  deflation is being countered by inflationary policies. Saifedean  Ammous’s The Fiat Standard critiques fiat money as enabling unchecked money printing, eroding  savings, and distorting incentives. Teaching financial literacy at Key  Stage 2, when children form foundational worldviews, can empower them to  navigate these realities through age-appropriate lessons on saving,  spending, and money’s diminishing value.

Adult Misunderstandings and the Need for Early Education

Many  adults lack a clear grasp of financial concepts, amplifying the need  for early education. Many people think the Bank of England’s 2%  inflation target is harmless. But even at 2%, your money loses value  over time.

Here’s a simple example:

- You put £1,000 in a savings account with no interest.

- After 1 year of 2% inflation, that money can only buy what £980 could have bought a year earlier.

- After 10 years, your £1,000 is only worth about £820 in today’s money.

- That’s an 18% loss in real spending power just from leaving your money untouched.

Many adults don’t realise this. A 2023 survey by the Money and Pensions Service found that:

- Only 48% of UK adults feel confident managing their money.

- Just 35% understand how inflation affects savings. 

This  misunderstanding leaves adults vulnerable to financial missteps, such  as keeping savings in low-interest accounts that fail to outpace  inflation, a point Ammous emphasizes in The Fiat Standard as a systemic flaw of fiat money.

If  adults struggle with these concepts, expecting children to learn them  organically is unrealistic. Key Stage 2 is the ideal stage to introduce  simplified lessons, e.g., showing how the cost of a toy rises over time.  This will build a foundation which adults often lack. 

Inflation’s Real-World Impact: ONS Data and Teachers’ Pay

An  updated PSHE curriculum will also require professional development for  teachers. Teaching Unions in the UK are again preparing to ballot their  members over the prospect of more industrial strike action due to  stagnating pay and inflation’s effects. The ONS reports the Consumer  Prices Index (CPI) inflation rate at 2.6% in March 2025, down from 11.1%  in October 2022 but above the 2% target. The Retail Prices Index (RPI),  affecting student loans, was 3.4% in February 2025. The Office for  Budget Responsibility (OBR) forecasts CPI rising to 2.7% in mid-2025,  with RPI averaging 4.1%.

Teachers  feel this acutely. The Institute for Fiscal Studies (IFS) estimates a  10% real pay cut for teachers from 2010 to 2024, adjusted for CPI  inflation. ONS data shows nominal pay growth of 5.9% from November 2024  to January 2025, but real pay growth (after CPI) was 3.2%, with public  sector workers trailing private sector counterparts. This means  teachers’ salaries buy less, reflecting Ammous’s point that fiat money’s  inflation punishes fixed-income earners.

If  teachers and other adults struggle with inflation’s impact, children  need early education, e.g., lessons showing how sweets cost more over  time, to build resilience against fiat’s erosive effects.

Government Priorities: Education Spending vs. National Debt Servicing

Comparing  education spending to national debt servicing underscores the need for  financial literacy. In 2024–25, England’s education budget was £78  billion. Debt interest payments hit £90 billion in 2022–23, driven by  high RPI inflation on index-linked gilts, and are projected at £80–100  billion annually through 2028–29, per the OBR. Debt servicing outstrips  education spending, diverting resources from schools. Ammous argues that  fiat money enables excessive borrowing, inflating debt burdens that  crowd out investments like education. The OBR projects a £10.1 billion  rise in debt interest by 2029–30.

Teaching  children about debt—simplified as “how the country borrows”—can foster  awareness of these trade-offs, equipping them to question fiscal  priorities in a fiat economy and to be better informed voters when they  reach the legal voting age.

A Curriculum for the Future

The Key Stage 2 PSHE curriculum must integrate content to address the following key questions:

• What is money? Explaining money’s role and creation.

• Who controls money? Introducing the Bank of England’s role, using analogies.

• How is money made? Discussing taxes and borrowing.

• What are inflation’s effects? Activities showing price rises, like the £1,000 example, to counter fiat’s bias.

• How does the banking system work? Using the meme to explain deposits and risks.

The 2024 House of Commons Education Committee’s call for financial education coordinators reinforces this need.

Conclusion

The  Key Stage 2 PSHE curriculum must include robust financial literacy to  prepare children for a fiat-driven economy. The meme “Your money in the  bank isn’t yours, isn’t money, and isn’t in the bank” reveals systemic  flaws many adults miss. ONS data on inflation, teachers’ pay erosion,  and debt servicing costs highlight the stakes. 

By  teaching money’s nature, control, creation, and the impact of  inflation, we empower children to surpass adult misunderstandings and  build a financially savvy future. Reform is urgent—our pupils deserve  it.

-------

This post, written by Jace, originally appeared on the Bitcoin Policy UK blog on 12 May 2025.