As easy as 1,2,3? What maths should we be teaching to help people make better financial decisions?

I have found it interesting to read the commentary and immediate reactions to yesterday’s headline – Rishi Sunak wants all pupils to study maths to age 18.

To quote a few social media posts I spotted: “I read the headline and thought it was a stupid idea from Rishi (but I’m not an actuary so maybe I don’t get it!)”, or “I barely made it through maths to GCSE level, I would have dropped out of school.”

When I dived into these conversations further, the issue seems clear. The first comment on one of the social media posts above purported that “maths beyond GCSE goes to some weird places that very few people need.” It is clear that many people see maths education as abstract and intangible. As an actuary, I have had many similar conversations with friends for whom thinking about maths at school fills them with horror.

And herein lies a significant problem — each and every one of us uses maths on a daily basis to make our own financial decisions. These decisions range from very basic calculations comparing the cost of goods or valuing discounts, to more difficult comparisons of financial products that involve compounding interest like mortgage rates and car loans. This is before we even talk about decisions around long-term savings including pensions, financial planning and investments.

So, as well as encouraging people to continue their maths education, I think that more needs to be done much earlier in the education journey to make maths more interesting, more appealing and more accessible.

We know that many people fail to save adequately for the future — our latest financial wellbeing survey found that 52% of respondents said that they “live for today”. How can we expect people to take good long-term decisions without supporting them to understanding the implications of their choices and the options available? Saving is generally a good thing, and even little amounts can add up over time. Saving £20 per month, earning moderate returns of 4% pa, builds up to around £24,000 over 40 years. On the other hand, paying for an unexpected purchase on a high-interest credit card instead of paying for it out of savings (or taking out a low-interest personal loan) could be the thing that puts someone into debt forever if the debt isn’t actively managed.

Marketing has become extremely effective, using behavioural nudges to make us think we are always getting a great deal. But this is rarely the case. Even consumer protections, such as those requiring additional information and illustrations alongside financial products, are only impactful if consumers are able to put information into context. For many, the more complex decisions are overwhelming, and they may not have the confidence to engage with this information.

Financial education and confidence with basic mathematics is fundamental to good financial decision making and that is universally important for financial freedom and empowerment. Improving numeracy skills such as budgeting, how to understand and manage debt, effective savings, and basic tax and/or benefit planning should be beneficial and relevant to everyone —regardless of their financial position, source of income or field or work.

This is perhaps even more important for those working in non-STEM areas such as the arts, who make up a higher proportion of the gig economy and are often self-employed. These workers hold even more responsibility for their personal finances, effectively as individual businesses, with often even less support available.

Does everyone need to study calculus or get an A-level in mathematics? That’s a personal opinion, but I would say no. However, I do believe that “de-mystifying maths from an early age," attracting teachers with the right skills and then continuing more practical mathematics education (both in school and made available more widely to adults) is incredibly important and will help the next generation make smarter decisions about their finances and their futures.