It’s been more than two years since financial education was embedded into the school curriculum here in the UK. While I believe we've seen some progress, we must still push further to ensure young people make informed choices with full knowledge of the potential consequences – positive and negative.
At the end of 2016, research from The London Institute of Banking and Finance found that 58% of 15 to 18-year-olds hadn’t received any fiscal education. At the same time, the Financial Services Compensation Scheme (FSCS) released a similar study revealing that millions of young children have no experience with money at all.
Meanwhile, charity StepChange recently announced that record numbers of people sought advice for problem debt last year, with UK credit card debt hitting record highs of £66.7 billion. This means it’s never been more important that we get this right.
Building real understanding
My own most memorable real-world lesson on debt came 30 years ago, when I bought a £120 microwave on credit. I repaid the agreed amount on time every month for a year, only to find that I still owed roughly the same amount. I realised then that it’s better to save for things than to buy them and then pay more for them later.
Young people need to be taught value in the same way. It’s not all about comparing offers, products and packages presented to them – it’s about earning the money before they can spend it. A House of Lords report published last month says that 40% of the working age population currently has less than £100 of savings. That’s unacceptable.
Of course, at Dukes Bailiffs we know debt isn’t always a choice. Because of this, we need to help build awareness that, if you do get into debt, the consequences can include court orders, criminal proceedings, high costs and sometimes losing your home. Practical advice on prioritising repayments to avoid these outcomes is essential.
Where we learn
While I believe that schools can do better in helping get these lessons across, there are others who can make a difference. The FSCS study highlighted that just 65% of parents offer their children financial incentives as a reward for helping around the home. Increasing this number and using it as an opportunity to help them understand the simple principles that underpin our modern economy could prove very beneficial.
Companies like ours can also have an impact. It’s not in our interests, any more than credit card and personal loan companies, to raise a generation of people unable to repay their debts. At the start of April, FCA Director of Competition Mary Starks rightly pointed out that intermediaries must work harder to make their charges clear to consumers of all ages.