I saw this tweet earlier in the week and it really struck a chord with me:
’I left school not knowing about taxes, credit cards, pensions or savings, but at least I got taught Pythagoras Theorem.’
Like many others, I left education having never had a single lesson or conversation about managing money or financial products. It was a topic that was rarely discussed at school or home, and this blinkered attitude has resulted in a lot of my generation not having the financial knowledge or skills to manage money properly.
As a young adult you go from needing to ask your parents for money, to suddenly having your own money – whether this is from your first job or that first student loan payment. Combine having ‘real’ money for the first time with living away from home, and it screams budgeting disaster. I remember finding it really difficult to manage my money when I left home for university. I had a full term’s student loan instalment plopped into my bank account, which was more money than I’d ever had in one go, and this promptly got frittered away. If I’d known about handling money I may have understood the importance of budgeting, and perhaps wouldn’t have made silly decisions like getting a huge student overdraft and credit card just because I could!
My early twenties were spent in a financial wilderness of making bad decisions and not thinking about the future. But I wasn’t the only one in this situation… pretty much everyone I knew was in the same boat. In short, we just didn’t know any different. Thankfully, as time went on, it became a lot harder to borrow, and the recession forced everyone to approach money differently. I became more sensible, more careful, and more knowledgeable about money management. But if only I had started saving for a house and a pension at twenty instead of thirty, I may be a homeowner with decent savings in the bank by now!
I look at twenty-something’s now, and they are definitely more financially savvy than I was at that age. But I still read about young people being sucked into debt through targeted store cards and credit cards, and the pressure to be, or appear to be, rich and affluent at a young age is higher than ever. The Ticking Timebomb of Generation Debt (2017), a report commissioned by the think tank, Easy Money, raises the question: “What kind of society repeatedly and relentlessly targets its children with temptations to get into increasing amounts of debt?”
So what needs to be done differently?
Young people need to be taught about money; saving, budgeting, credit cards, loans, mortgages, tax, the lot. Financial education is now part of the curriculum in secondary schools, which is great. But my understanding – from speaking to teachers – is that it comes low in the pecking order and that some teachers don’t feel equipped with the knowledge to effectively teach it. This is where there is an opportunity for more training to fill this gap. Furthermore, it’s still not compulsory to teach financial literacy in primary schools. This would be a great chance to at least make young kids just a little bit aware of money, and able to learn and develop this knowledge as they grow up.
It also needs to be talked about more at home. There are also plenty of free apps that can help you with money management – the me&mymoney app, for example. If children and young adults can see their parents or caregivers living in a financially sensible way, surely some of it will start to sink in over time.
With some big changes like education, and subtle shifts like teaching your children about money at home, I hope that the next generation will grow up more financially knowledgeable and thus more stable than their predecessors.