After an eight-month inquiry, the All-Party Parliamentary Group on Financial Education for Young People called on ministers to ensure school-leavers are better equipped to avoid running into money problems.
It published a report today demanding that personal finance education be made compulsory in schools.
This would mean children as young as five being taught the basics of saving.
Financial numeracy should be taught within mathematics and ''subjective aspects'' as part of Personal, Social Health and Economic (PSHE) education, the report said.
The group recommended the appointment of a co-ordinator or ''Champion'' within each school responsible for bringing personal finance education together.
Personal finance teaching is currently ad hoc, with only 45% of teachers responding to a survey by the inquiry saying they had ever taught it.
Today's report comes ahead of a Commons debate about the issue on Thursday, secured after more than 100,000 people signed a petition by money expert Martin Lewis calling for financial education to be made compulsory.
Tory MP Andrew Percy, who chaired the inquiry, said: ''Credit cards, mortgages, hire purchase agreements, mobile phone contracts, tuition fees and even supermarket offers all require us to apply functional maths skills, such as being able to calculate APR, compound interest and percentages, to real-life situations.
''But too many of our school leavers, who can perform complex mathematical equations and algebra, have no idea what basic financial terms like APR and PPI mean - leaving them without the necessary level of financial literacy to make decisions in an increasingly complex financial world.''
He added that financial education would be a long-term solution to irresponsible borrowing and personal insolvency.
''Furthermore, teaching people about budgeting and personal finance will help equip the workforce with the necessary skills to succeed in business and drive forward economic growth,'' he said.
Wendy van den Hende, chief executive of the Personal Finance Education Group (PFEG), said: ''Young people want to learn how to manage their money, and school is an excellent place for this to happen.
''Teachers clearly want it to be part of the curriculum, so that it is taken seriously and has the support it deserves to be taught effectively.''
Mr Lewis, who is behind the MoneySavingExpert.com website, said: ''We need compulsory financial education in our schools.
''Our nation is financially illiterate, for over 20 years we've educated our youth into debt when they go to university, but never about debt.
''Breaking this cycle will mean less mis-selling, fewer bad debts, better consumers and could save the public coffers a fortune.''
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Education minister Nick Gibb claims celebrity culture and obsession with wealth is harming children
British children are growing up in an “destructive” society obsessed with the celebrity way of life and need to be taught to live within their means, an education minister has warned.
6:09PM GMT 15 Dec 2011
In an attack on contemporary values, Nick Gibb argued that a “got to have it now” culture was breeding unrealistic expectations of wealth in young people.
The schools minister said millions of children were being raised with the wrong priorities and equated wealth with success. He was speaking in a Commons debate about whether children should get a better financial education.
“Young people are growing up in a materialistic world for which they are often not fully prepared,” Mr Gibb said.
“The 'got to have it now’ culture means young people have high aspirations for branded or designer goods, often without the means to pay for them. People have unrealistic expectations about the lifestyle they can afford, fuelled by the glittering trappings of celebrities.”
Mr Gibb also told the Commons that he would like to see schools put a greater emphasis on maths teaching.
“We all have a job to do in moving young people’s aspirations away from this empty and often destructive perception of what success means,” he added.
“Developing children’s intellectual capabilities and interests is a direct antidote to materialism.
“Alongside that, young people must acquire a sense of responsibility. They need to contribute to society as responsible citizens and not take wild risks. They need to learn to live within their means.”
The Commons debate was tabled after more than 100,000 members of the public signed an online petition calling for schools to give lessons in personal finance. The campaign was backed by Martin Lewis, who runs the website MoneySavingExpert.com.
It was brought to Parliament by Justin Tomlinson, a Tory MP, who argued that people were making poor financial decisions “not necessarily through their own fault but because they didn’t have the skills”.
He said some people might have avoided crippling debt if they had been taught about interest rates at school.
Mr Gibb stopped short of backing compulsory financial education for all but pointed out that the Government was reviewing the National Curriculum.
The education minister’s attack on the “got to have it now culture” was made just weeks after Lord Sacks, the Chief Rabbi, criticised the selfishness of the consumer society.
He said the iPad and iPhone products sold by Apple helped contribute to a culture of egotism, because of their emphasis on personal ownership.
“The values of a consumer society really aren’t ones you can live by for terribly long,” the Chief Rabbi said.
“The consumer society was laid down by the late Steve Jobs [the founder of Apple] coming down the mountain with two tablets, iPad one and iPad two, and the result is that we now have a culture of iPod, iPhone, iTune, I, I, I.”