The case for finance to be taught in schools
With stagnating wages, increasing household bills and debts, times are most definitely lean for thousands of British households.
Unquestionably, the economic downturn has been behind many people’s finance woes. However, a lot have also found themselves in trouble due to reckless borrowing.
During the first half of the last decade it became very easy to borrow money cheaply, and sadly some people gorged themselves on debt that they will now have no way of repaying.
With this in mind, many people are calling for personal finance to be taught to children in schools.
Last month, TV journalist and founder of the website Moneysavingexpert.com Martin Lewis, told the Daily Telegraph that he is making it his mission to get finance added to school curriculum alongside Maths and English.
“The cost of introducing this is trivial, but the benefits aren’t. This stuff isn’t difficult, but the brain has to be tuned the right way to think about money.
“Forty or 50 years ago your bank was there to look after you, and you did what you were told. Now your bank is there to sell to you and you have to understand what they are trying to do. But you don’t get buyers' training, so how are you supposed to know?
“Top engineering bods need algebra, but the rest of us need to know how to work out APRs [annual percentage rates, used to calculate the true cost of borrowing]. Maths at the moment is incredibly theoretical, but these are real examples that affect real people.”
A recent study by MoneySavingExpert suggested that a lack of financial education costs the UK in excess of £3.4 billion each year.
Of that figure, around £600 million is taken up by unemployment. The study estimates that out of work households cost the economy around £6 billion a year, but better education would reduce that by around ten per cent.
Financial teachings could potentially save the taxpayer £1.8 billion in payments to the recently retired because they would see the benefit of making provision sooner and not have to rely on income subsidies.
MoneySavingExpert also feels that overall debts would be reduced by around £716 million if people understood more about finance and what they are letting themselves in for when they sign up for a loan, overdraft or credit card.
The findings are backed up by an eight month study made during 2011 by the All-Party Parliamentary Group on Financial Education for Young People.
In its report, it said that financial numeracy should be included in lessons rather than being taught on an ad-hoc basis as it appears to be at present.
The 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 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, have no idea what basic financial terms like APR mean – leaving them without the necessary level of financial literacy to make decisions in an increasingly complex world."
Justin Tomlinson MP, chair of the group, added: "Young people are entering an increasingly complex financial world of store cards, mobile phone tariffs, credit agreements and financial marketing.
"It is vital that we equip them with the skills they need to be savvy consumers.”
Figures published by Arkline Legal Agents in September 2012 stated that that on average 314 people in the UK are declared bankrupt each day due to debt problems, while 1,443 are made party to a county court judgement (CCJ).
This post and the information within was supplied by debtfreedirect.co.uk