Personal finance shouldn’t be extracurricular

Last week, the Citizens Advice Bureau (CAB) announced that more than 62,000 people declared themselves bankrupt last year, an increase of almost 10,000 compared to 2005.

Image: Jack had to take it upon himself to brush up on his personal finance skills

While those figures are representative of all age groups, the body says that the increase is likely to be at least in part to people aged 30 and under relying on credit cards, loans and store cards to fund extravagant lifestyles.

The scale of the problem certainly seems to be worsening; the CAB says it is getting increasingly worried about the number of young people that are going to them for help with the debts they have built up. Over 50,000 under 25s visited a CAB centre in England and Wales in 2008 and 2009, while further research found that a staggering quarter of 16 to 24 year olds have suffered mental health issues because of the state of their finances.

The reasons cited for this worrying trend are depressingly familiar. Young women are racking up debt like it’s going out of fashion because, ironically, they just have to be bang on trend – if Coleen or Cheryl has it, so must they. Young men seem to be no better; never mind that the car, bike or gadget is inordinately unaffordable, the attitude for some has become buy now, pay later. The reality, however, is that they will never be able to pay, instead falling into bankruptcy.

There are programmes out there that help young people who find themselves in this situation, and they should be applauded. But isn’t it about time that more emphasis was put on educating people from a young age on the pitfalls of frivolous spending? Should they not be taught that heavy debt puts a significant burden on both their financial and social wellbeing? Surely by teaching children in first and secondary schools about sound financial choices and the pitfalls of debt, the number of young people being declared bankrupt in years to come has more chance of falling.

At present, the national curriculum encompasses a personal, social, health and economic education module, with one of the aims being to provide students with financial capability. Now, forgetting the fact that the financial aspect takes up just a quarter of the programme, it is actually considered a non-statutory module of study at all four key stages. A child could quite conceivably go through their entire school life without being taught so much as how to use a debit card.

Are subjects such as design and technology and citizenship really considered to be more important than personal finance? And if so, why? Pupils leaving school and entering the world of work or further education should have at least some idea of personal banking, income tax, how to budget effectively, how to service small levels of debt effectively and so on. By the same token, the long-term effects of building up unmanageable debt levels and ultimately, bankruptcy, should be made crystal clear. Making personal finance a statutory part of the national curriculum is the only way this could conceivably be done effectively.

At a time when poor credit history means that your chances of securing anything from a mortgage right down to a phone contract will be hindered for years to come, we are doing the younger generation a disservice by letting them walk blindly into a world of debt.

James Henderson, Reporter, Moneyfacts Group