Financial education found lacking

Monday, 14 November 2011 12:41

Financial education found lacking

Financial education found lacking

The issue of financial education has been raised frequently by those concerned by the extent to which Britons have failed to grasp the most important skills of managing money.

Some hard lessons, it might be suggested, have had to be learned in the wake of the credit crunch and some evidence has been produced that parents regard it as important for their children to know how to handle money.

A recent poll by Yorkshire and Clydesdale Banks, for instance, showed 48 per cent of parents regard good knowledge of how to deal with financial issues as something they want to pass on to their kids, the third most prominent area of teaching they would like to achieve behind inculcating good manners (74 per cent) and morals (75 per cent).

However, 18 per cent of parents said nobody taught them anything about handling money when they were young.

That, of course, may be a generation issue stemming from people who did not have as much money to spend or credit on offer, but did have better job security and perhaps more optimism about the future.

Nowadays, the reality for many people is harsher, such as for students who face high levels of debt through loans and fees. But the level to which they appreciate this varies.

A Friends Life study of 16 to 19-year-old students – which concluded better financial education is needed – revealed girls were the more realistic about the situation, being more likely to accept that they would require part-time jobs while studying and the need to do unpaid internships after graduation as a way into work.

Female students were also more realistic about the time it would take to pay off their fees at a typical estimate of 12 years, whereas for boys the average was ten.

However, both genders were unrealistic about their first salary after graduating, with girls expecting £23,000 and boys £24,500 on average, when the reality is around £20,000.

Human resources director at Friends Life Rob Barnett observed: "These are issues parents are facing too, as graduates may be dependent on their parents for longer after graduating due to the current economic situation."

The reality, it seems, is that the current generation contains many people, even among those achieving well in education, who are not fully aware of the importance of handling money well.

Andrew Smith, spokesperson for ClearCash, comments: "Financial education is important, but useless to the many thousands of teenagers who leave school without being able to read or write confidently or do basic sums.

"The levels of literacy and numeracy in the UK can only change slowly and there will be problems for years to come. So, in addition to education, we need simple, understandable and foolproof products which help consumers maintain control of their finances, at predictable cost. Prepaid cards, such as ClearCash, are a great example of this."

So it may well be the best solution – while some wait and hope for better financial education for those still at school – is for people who are in the big wide world to seek ways of budgeting and keeping their spending in check that will enable them to avoid getting into financial strife, while they gradually learn how to take control of finances.  



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