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Financial Education in Schools
Given the complexities and uncertainties of today's global economy, I feel it is now more important than ever for young people to learn how to manage their finances. Children and young people experience money from a very early age, from receiving pocket money to saving for a special treat. As they grow older, the financial decisions they have to make become increasingly complex. Young people need to understand what money is all about how banks and other financial providers work and how to manage their personal finances, both now and in the future.
In a survey earlier this year for Personal Finance Education Group it was concluded that 95% of young people thought it was important for them to understand how to manage their money. The top things they wanted to learn more about were household bills, the money side of work (income tax, national insurance etc), budgeting, the cost of a house/apartment of their own and savings. Almost two-thirds of young people said that they were worried about not having enough money in the future.
It is essential for young people to be given the tools to be able to make informed decisions about their finances in order to help them avoid falling into debt or on the other hand to help them sort out their situation if they do find themselves experiencing debt problems. A big stepping stone would be for schools to begin by educating young people on the basics of money management, including; how to open and manage a bank account; budgeting, spending and loans; saving and planning for the future.
The Consumer Credit Counselling Service (CCCS) reported that a total of 753 young people aged 18/19 years old contacted them in 2010 seeking advice on how to deal with an average of £2,254 in unsecured debt. For those who had overdraft debt, the average amount owed was £671 and those who took out a personal loan, the average amount borrowed was £2, 610. Those who also had credit card debts had an average outstanding balance of £898.
What do these statistics mean?
These statistics show that a lack of budgeting knowledge needs to be the blame for such debt problems, therefore supporting the argument for the need of financial education to be made compulsory in schools. A teaching model needs to be introduced that equips young people with the skills and knowledge required to become responsible consumers.
Chartered Financial Planner