Throughout school, college and university, we gain vast amounts of knowledge. We learn incredible amounts, about topics ranging from geography to food preparation. There is, however, one gaping hole in our education and an awful amount of people suffer as a result of this omission. What we are not being taught is the basics of managing money, and this oversight is negatively affecting countless people.
I am of the firm belief that our educational establishments should be preparing people for the world in which we live, but too many are stubbornly sticking with an outdated curriculum. This means that young adults are entering the world of work, or higher education, without an understanding of how to effectively manage their money. Opening and maintaining a bank account, understanding overdrafts, loans and credit cards and making sense of payslips is what young people need to be taught. Without this, there is a danger of being taken advantage of by an unscrupulous employer who withholds pay, or a money lender who charges extortionate amounts of interest.
Young people need to be made aware of:
- Bank accounts. This means that they learn how to open a bank account and maintain it, how to deposit and withdraw money, online banking, mobile banking, setting up direct debits and managing overdrafts. It would also help to advise young people about switching bank accounts, and when that may be advisable.
- Taxes. What are taxes and how do they work? AT what earning thresholds do taxes rise and by how much? What is self-assessment and when is that applicable?
- Credit Cards. How to apply for a credit card, and it’s impact on your credit score. Understanding interest and other charges, and making repayments.
- Creating an invoice. The world of work is changing and there is a growing trend towards self-employment, freelancing and entrepreneurship. Even if their desired career path involves full-time employment in an organisation, it is important that young people know how to claim hours worked on a project and issue invoices.
- Payslips/ P45s/ P60s. Often full of technical terms and numbers, it is essential that people are able to make sense of these statements of their earnings. People need to know how much they have been paid, and how much has been taken in taxes and other deductions.
- Pensions. Even young people need to know about pensions, because this can affect decisions made about their long term future. It is important that people know about the different types of pension and the advantages and disadvantages of each.
- Managing finances. Regardless of whether they are starting a degree or entering employment, young people need to learn how to become organised and take control over their finances. The ease with which credit cards and loans can be obtained is worrying. I myself have fallen into this trap before, borrowing thousands of pounds on several credit cards for nice clothes and fancy holidays. Yes I had wonderful experiences and nice things, but the debt and its repayment was not fun. It got to the point where I was working 2 jobs only to see least 70% of my earnings go towards paying off my card debt. The best way to avoid the many pitfalls is to become organised. Save your payslips or invoices in a folder for easy reference. Use a tracker app to keep a record of your weekly outgoings and incomings. Or just write them in a notebook. It’s worth bearing in mind that you need to fully understand how much you are spending and earning if you want to be in control of your financial wellbeing.
The good news is that there is plenty of advice freely available for everyone. Some schools are starting to deal with some money matters as part of Business Studies courses. If you don’t feel that this goes far enough, write a letter or start a petition asking that the school incorporate more teaching on the subject of money in their curriculum or hire specialists who can offer this in the form of workshops.
Universities also offer plenty of help and advice but you often have to be proactive and seek it. Thankfully, this is no more difficult than speaking to a Helpdesk Advisor (or whatever your particular institution calls them). An appointment will then be booked with a specialist who can answer any finance related questions.
Outside of educational settings, further help is available for everybody. Naturally, the internet hosts countless blogs and websites which can help you to better understand money. If, however, you prefer to speak to somebody in person, there are countless debt-relief and financial advice charities who would be keen to help you in any way they can.
Please see below for some of the leading UK charities which deal with money matters. Search in your local area for more options, and don’t be put off by the scary “debt” word. While their primary focus is helping people manage their debts, charities also provide education on all money-related matters. After all, the better people understand money, the less likely it is that they will become trapped and burdened by debt.
- StepChange Debt Charity https://www.stepchange.org/
- The Money Charity http://themoneycharity.org.uk/
- Debt Advice Foundation http://www.debtadvicefoundation.org/
- National Debtline https://www.nationaldebtline.org/
Money, and managing it, can appear very scary but it doesn’t have to be. If there is something which you do not understand, seek help, because ignorance in money-related matters can only hurt you if left untreated.