University to teach money management skills for high-earning 20-somethings

-  A first of its kind initiative within the world of higher education -

Nine in ten students receive no advice from their university about how to make the financial transition from life as a student to the world of work, says a new survey.

And with post-Covid recruitment drives and a summer ‘pay war’ bumping up graduate salaries, one university will start teaching money management skills this term so that its graduating law students avoid excessive risk and are better able to cope with any newfound wealth.

With findings* showing that 75% of soon-to-be lawyers expect to be in a higher earning bracket than either of their parents, BPP University Law School – which prides itself on preparing around half of its graduates for a City law career – has called in the country’s top financial planner to help. 

Paul Welsh – the UK’s Certified Financial Planner Professional of the Year – who has designed and will run the course says that “people often come out of education with very little idea of the importance of money management. Budgeting, debt and savings can be quite dull subjects and it’s easy to make mistakes.  Our emotions and ‘rules of thumb’ often affect our financial decision-making.  People think that they make rational decisions but, without advice, they tend to behave more like Homer Simpson than Mr Spock.”

Starting salaries at some City law firms have reached almost £150,000 and experts fear that ‘personal finance literacy’ among 20-something graduates hasn’t kept pace with the growth in earnings or the proliferation of often dubious ‘get-rich-schemes’ designed to attract the novice investor.

The BPP course has been created following research [from F&C Investment Trust] which suggested that one in six British 18-23 year olds invested for the first time in the 12 months to May 2021.  More than half of these Gen Z investors directly followed investment advice from social media.

Mr Welsh says investment misinformation has grown exponentially in recent years and professionals are not immune to getting trapped.

“There is a lot of dangerous advice and get-rich-quick films across social media. TikTok, for example, is full of films of people in glamorous locations saying they can teach you to trade currencies or build a commercial property portfolio, so you only need to work a few hours a day.  The films make you think ‘that’s the lifestyle I want’, so you listen to the advice. Many of the people watching don’t understand that there is always an element of risk when it comes to investment.”

“Often there is an unawareness of the irrationality in our financial thinking, and we are all susceptible. Graduates and professionals can be more susceptible to that fallacy because, they think, they are more educated and rational,” he added.

In addition to warning students about unaccountable social media influencers and explaining the importance of investments, wills, tax, and pensions, the university will also offer modules on ‘how to acquire good financial habits from your first day in the office’ and ‘how to manage your budget in your first year of work’. Chris White, a former corporate solicitor who founded Aspiring Solicitors – an organisation focused on increasing diversity in the legal profession – will also offer a programme for students to help them avoid some of the investment missteps he took during his time as a “working class” boy enjoying the benefits of a City law firm salary.

The BPP initiative – the first of its kind within the world of higher education – is being introduced after research from the University showed that 93% of its students had not been given any advice while studying elsewhere as an undergraduate about how to make the financial transition from life as a student to the world of work.  Only half (50%) said that they felt confident when it comes to managing money.  And three in five (59%) said that worries about money had impacted their mental wellbeing.

A report published in March this year by the Financial Conduct Authority warned that a growing number of young investors were taking big financial risks when investing in high-risk products including cryptocurrencies and foreign exchange trading.  The regulator warned young women from an ethnic minority background were often particularly at risk.

Jonny Hurst, Head of Outreach & Student Recruitment at BPP University said that “it’s understandable that many young people aren’t that interested in personal finance until they start to receive a significant paycheque.  But they really do need sound financial education before then.  There are so many ‘get rich quick’ schemes out there and you need to know, or work with an expert to help you know, the difference between the real opportunities and the scams.

“Our research showed us that less than half (47%) of students say that, after securing their first legal job, they would be willing to pay for financial advice on matters such as repaying loans, saving and options for retirement. Our programme is designed to explain why sound money management is so important, even at the start of a career, and to highlight areas which are frequently overlooked or misunderstood by the junior lawyer community when dealing with their personal finances,” added Mr Hurst.

The research from BPP also highlighted that one in five (22%) prospective lawyers said they would feel embarrassed talking to friends and family about their financial circumstances and two thirds (65%) feel a tension between living in the moment and trying to exercise some level of financial self-control.  Two in five (39%) said they feel pressured to keep up with the spending habits of their friends.