Financial education…..it’s complicated, but not impossible
Martin Lewis says ‘The modern UK has a nasty debt habit’ and he is right. I don’t say this from a judgmental perspective (and I am sure he doesn’t either). But, if you take a step back and look objectively at how we manage our personal money lives I don’t think many people would disagree.
The alarming rise of pay day lenders, their use, and attempts to curb their use, is only one symptom of the problem. So is legislation and regulation the answer? Should financial literacy be a compulsory part of the curriculum and local authorities have a duty to promote financial inclusion?
As anyone that reads my blogs regularly might predict, my answer to that is …it’s complicated.
Research from a plethora of sources, including the Money Advice Service, shows that young people learn about money primarily from their parents. The financial environment that they, as families, live in is demanding and complicated. Input at school would help, but these messages need to be echoed at home. This means that some parents need to learn to manage their money better, first.
Then there is the matter of financial services. It’s all very well to tell people to be ‘prudent’. Life’s ups and downs are often partnered with money ups and downs. If someone needs to borrow a small amount and the bank won’t lend it to them, where do they go? Sadly more and more people are turning to pay day lenders instead of responsible lenders like credit unions.
Interestingly, for some, the introduction of much more stringent ‘money behaviour’ checks for mortgage applications may be surprisingly effective at changing attitudes to money. No longer will the use of pay day loans (whether paid off, or not) be acceptable – and I am not surprised. It may only be a matter of time before other kinds of lending follow suit. Indeed many credit unions already have these conversations with borrowers.
The National Assembly for Wales is currently considering a proposal for a Financial Education and Inclusion Bill. Take a look at our response to the consultation related to this Bill. It’s complicated, but not impossible.