Does thinking about 95% mortgages and how one works confuse the life out of you? Or does your overdraft keep you awake at night? Do many of us really understand the implications of the APR on a credit card or loan?
I ask these questions because since leaving the protective cocoons of school and higher education, many of us face more and more responsibilities when it comes to managing our money. Before university becomes even more of an expense than it is now, aside from Saturday jobs and pocket money, many of us had never seen so much money in our bank accounts following on from our Student Loan applications and of course then, banks become very interested in you. So interested, that during my first year of university, my bank were trying to flog a student account, an interest-free overdraft of up to £3000 and credit cards at me left, right and centre. I’m thankful that I repeatedly turned down their offers and instead managed to live off my part-time job because I was lucky to be able to commute to university.
Others were not so lucky and obviously when you move out and live in halls or rent later on down the line, all of those offers are almost a necessity to you but it’s of course your responsibility to then make use of them wisely. Is it any wonder that with the combination of tuition fees, maintenance loans, rent, bills, course materials and other expenses that graduates pre-2012 rack up on average around £26,000 worth of debt, with that figure set to double in future for post-2012 university entrants. With all of the temptations of interest-free overdrafts, store cards, credit cards and money loan companies, is it solely the responsibility of our parents to teach us about wise money management or should personal finance be part of the National Curriculum within schools?
Maths was not my best subject at school (as a Journalism graduate that’s probably not a surprise!) but apart from basic numerics, I often wonder why we were not taught about current accounts, mortgages, loans, credit cards and interest. Without any disrespect to our education system but not once since leaving school have I ever had to use algebra or π for that matter and although many of the older generation may argue that we shouldn’t expect to be spoon-fed throughout our lives, with the current economy and the uncertainties of the job and housing sectors in the future, personal finance should become compulsory within schools.
Earlier this year, Education Secretary Michael Gove announced changes to the National Curriculum with plans to include personal finance within pupils’ Citizenship lessons. There have been mixed reactions from academics in relation to these reforms but at least it is being recognised that money management should become a key part of our education system. Of course parents should teach their children about managing their personal finances and it is up to us as individuals to take responsibility for those finances as we get older. Loans and student debts are inevitably unavoidable for most but make sure you know the implications of credit before signing up for that Topshop store card, afterall money doesn’t grow on trees.