Context

The Money and Pensions Service (MaPS) is committed to developing and coordinating a national strategy aimed at enhancing financial education for children and young people across the UK. Its ambition, set out in its Strategy for Financial Wellbeing, is for 2 million more children and young people receiving a meaningful financial education by 2030.

The expansion of digital forms of digital money management and transactions in recent years, accelerated by the COVID-19 pandemic, has fundamentally changed how people interact with their money. From everyday purchases to interactions with banking institutions, digital money is now a critical aspect of the financial lives of the younger generation. In a context in which digital money is increasingly normalised, it is important to understand the current landscape of financial literacy among children and young people and re-evaluate traditional financial education paradigms.

The study

Conducted for the Money and Pensions Service (MaPS), the study involved a rapid evidence review and expert interviews. With a focus specifically on how children and young people (defined as aged under 25) learn about digital money and digital financial transactions, it explored two main substantive questions:

• What research literature exists on how children can learn about money, specifically in a digital age?
• What interventions exist that seek to teach children about digital money or influence children’s online financial behaviour and how effective are they?

Rapid evidence review

The rapid evidence review adopted a collaborative approach with MaPS to defining the scope of the search and the relevant search terms. It also adopted a methodical and rigorous approach to the searching, screening, selection and assessment of academic and grey literature from across several academic databases, major academic journals, Google Scholar, relevant organisations and reviewed interventions identified in a previous MaPS report.

Expert interviews

Short (up to 30-minute) semi-structured expert interviews were undertaken with four academics and professionals with expertise in financial education, digital money and the application of educational technology.

Key findings

• The digitisation of financial transactions offers benefits such as greater financial inclusion, new earning opportunities and the potential for enhanced financial management through digital tools.
• It also creates significant risks, including exposure to online fraud, cyber security threats and the normalisation of financial risk-taking through the gamification of digital financial platforms.
• Digital platforms and peers play an increasingly influential role in the way children learn about money.
• Diverse experiences and challenges faced in the digital financial landscape highlight the importance of tailoring financial education to the needs of specific groups.
• There has been a shift towards children and young people consuming more information online, but they are not always being able to discern between real and fake news or ensure quality of content.
• Several interventions aimed at enhancing children's digital financial literacy exist, though evidence of their long-term effectiveness is limited.
• The expert interviews highlighted the need for collaboration between educators, financial institutions and policy-makers to develop effective interventions.

The review also identified significant gaps in the evidence base. To design effective digital financial education interventions, there is a need for:

• a common definition and measures of digital financial literacy
• a better understanding of the landscape of technology for providing financial services to children and young people, and
• greater research into children and young people's online financial behaviours, knowledge and attitudes.

Points to consider

• Methodological strengths/weaknesses:
  • The report provides a rigorous review of the literature based on a systematic approach to the searching, screening and evaluation of the relevant literature.
  • The insights from the four participating experts complement the findings from the literature review, but should not be interpreted as being wholly representative of the perspectives of relevant experts across the UK.
• Applicability:
  • The study is likely is likely to have wide applicability to other more economically developed countries (MEDCs) where there is significant migration towards the digitisation of money.
• Relevance:
  • The study is highly relevant given the increasing emphasis on digital forms of money management and transactions in the United Kingdom and elsewhere.
• Generalisability:
  • Many of the findings are likely to generalise beyond the age groups focussed on within the review.