Compulsory Consumer Finance Education Discussion

lippyd

We need to teach kids about Personal Finance inc debt, banks, Building societies. Pension provision what and how they work and Mortgages what they are how they work.
I wish I had been taught this, my Kids will definately know from my mistakes.

phague

Hello,

I was never taught at school about Mortgages and loans.
Given buying a house, or a car, is the single biggest purchase a person will ever make I think this should be taught to every child, especially as just 1% difference can mean paying thousands more over the term of a mortgage, or loan.

I know family members who got into debt years ago with buying from catalogues, as they never took any notice of interest rates, when they could have bought things elsewhere on interest free, or 0% finance.

MidLifeCrisis_3

Wonderful idea! Parents do fail miserably at teaching their children so many social skills and this is one that they'll need for life. The best grounding for this however would be to educate the parents too.

We have so many friends who are up to their eyeballs in debt as they've just "got to have" the latest this, that and the other meaning that their and so many other kids are growing up with this "must have at any cost" attitude. We only buy what we need and don't have the latest tv, etc with no desire to rush out and buy one only to see it date and drop to half price in 6 mths. Instead, we've worked to pay our mortgage off and became mortgage free at the grand old age of 36. Don't get me wrong we certainly don't go without, but we also have to watch the pennies to do and have nice things. We are now saving extra towards our future retirement plans, but of course, to them we are tight fisted.

We were so proud of our 6 year old son recently we took him to a shop for some new trainers. We saw a pair for £7, but he wanted the Ben 10 ones for £14, so we gave him the choice; if you want the Ben 10 ones we will pay the £7, but you'll need to pay the rest from your birthday money. We simply made him aware of consumer choice over commercialism by explaining that if he bought the Ben 10 trainers it meant he would not have the £7 anymore and would not get to buy the lego he wanted. Wise boy chose the £7 trainers and decided to save all of his birthday money in the end towards a car for when he is older (he thinks he has passed his driving test on CBeebies Postman Pat website and can 'drive' a helicopter too!).

MLC

Debnat_2

I think it would be great if you covered the fact that the things we do in our financial lives have lasting consequences and will follow us around making life difficult on our credit files for the next 6 years. I'm a mortgage broker and I've had many young couples coming to me hoping to buy their first homes only to find that one or both of them are not credit worthy. This is often due to simple thing likes missed credit card payments or, increasingly, mis-managing their mobile phone accounts. We are seeing the consequences of all the easy credit that was being dished 2 or 3 years ago. One young couple who were only 23 years, old had just under £40k of debt on credit cards and car finance between them. They couldn't manage all the repayments they already had but were still blithely thinking about getting a mortgage. Their credit files were both damaged and they had absolutely no idea that this would affect their ability to get credit. Conversely, you could mention that good management of your own personal finances, paying back what you borrow in a timely way and sticking to the agreements you have made, means that more and better options are ope to you.

awpc

Just a few disconnected jottings :

Lesson 1 -there is no such thing as a free lunch !!

Examples

0% APR -anyone offerring this has already built the finance cost into the price. Buy now when you can afford and not on credit

When you see major national bed and sofa retailers offerring 50% then quite often the sales are not genuine. The price has been inflated beforehand

Dont always believe that "sale" is a genuine sale. Watch how the price of wine increases before it is then offerred for sale.

Dont always believe the internet is cheaper -use it for research but deal face to face with people. Your credit card details are widely exposed on the internet and there is less risk of stolen identity if you deal with a store in person.

Lesson 2

If you cant control your debt -use cash instead. Only spend what you have

Lesson 3

Dont believe the Bank marketing about being local and helpful. Most of them are faceless,impossible to talk to or reason with,dont understand business and the real world They are only interested in making money for themselves.

Lesson 4

Dont always believe that cheapest (supermarket ) is best. Better quality is often found at the local specialist butcher or baker and its worth paying for the extra taste. So dont always believe the price messages.

Prw_2

I would ask Ed Balls why did he not ask Gordon Brown or Alastair Darling for advice. And afterall he has been an economic adviser to the Treasury for the last 10 years, During which time the government has discouraged saving and encouraged debt - both personal and public?

JAKIRKPATRICK

First time posting, however a subject very close to my heart.....
Love to represent parents and come and meet Ed Balls with Martin for the following reasons....
As a parent to 9 and 14 year old boys, inspired by them, I've been leading a completely voluntary pilot project on financial awareness within the primary and secondary schools which formed the first School Partnership Trust in the country. Having left a major bank with almost 17 years experience earlier this year I've since been passionate about using this knowledge and experience to help educate and inspire our children with fun, exciting and innovative ways to learn about financial awareness.

Part of the project involved an anonymous “Money Quiz” which provided valuable insight into the children's knowledge about money. This approach allowed us to tailor the pilot and lessons to questions our children raised and wanted to know more about money. The data analysed showed almost a third of the children who responded wanted to learn how to spend money properly.
Our project started in the build up to the first ever “My Money Week” which ran from 29th June. The themed week is an annual Government led initiative dedicated to schools across England learning about money. All of our schools chose to take part across several weeks rather than just one. This involved some of the schools completing an Enterprise challenge. With just £20 to spend, the Year 4 children had to come up with ideas how to make profit for the school, make the products, do their own marketing and then put their plan in action and sell, most choosing their Summer Fair to run a stall ! Other schools piloted a series of lessons, Years 1 and 2 looked at how much pets cost to buy and keep, coin recognition and money ICT games. Years 5 and 6 played pocket money and family budgeting games with realistic amounts, learnt what terms such as “nest egg” meant and gave important feedback on what they would like to learn.
To summarise, this subject needs parental co-operation, local business and community and schools pulling together. From supporting financial awareness lessons in the classroom it is clear time and planning are an issue for teacher's and our project plans long term address this. Feedback from all the voluntay work has been extremely positive and I am keen to take all our findings to Ed Balls to demonstrate what can and needs to be done to assist schools and help all our children irrespective of age or background to be more knowledgeable and confident with finance than perhaps we were when we left school. As stated above though I think this is a subject that we can teach and integrate into all aspects of the curriculum with a little creativity and support from parents, business and the government.
So go on Martin take me with you and let me represent the parents......

kazmeister

I agree with lots of the above posts, I am in my 40's and dont have a clue about national debt etc and what it means, why we are in recession or anything else. Has school failed me or have I failed myself in not having the time to find out these things, who knows. What I do know is that everything is costing more and business are failing every day and that I have to try and budget for every penny.

As for what to teach children, they need to be taught that money has to be earned, through hard work and they should value everything that they buy. Even at a young age a child can do small chores to earn pocket money and with that they should be taught to save up for something they want and to keep a savings pot for things they need. They need to be taught that credit costs, big time to all of us.

My daughter aged 10 has the chance to earn up to £10 per week pocket money by doing proper chores around the house. She earned well for a while but now chooses not to due to laziness. Do I treat her, rarely. I will buy her essentials but anything else she goes without until she can learn. My son aged 17 has the chance to earn too, again he chooses not to. I have told him he needs to get a job to fit around his studies but does he, No. He again gets provided with essentials only.

Oh and they were both given a copy of Martins Cash guide for teens some time ago!

joeyjojo9658

This is an absolutely brilliant post

dots_thots wrote: »

I'm glad this has come up because our system of money has changed money to currency and is completely dishonest. The average person in the street when they understand it see it for what it is - theft. It takes an expensive degree to be convinced otherwise.

So here is my list of important things to teach kids about money. How you make this fun is to do it in a historical context starting with the goldsmiths of England. Basically the following points could be covered somehow. How you make it understandable for kids is another point but I guess the class would continue upwards as the kids get older. The basics are simple, but the effects are complicated so I'll leave that for the teachers to suss out.

1. Explain what money is, how it came into existence from the most marketable commodity and how it differs to currency (what we have now).
2. Explain about the purely fiat monetary system we have and how it adversely impact the average person at the expense of a few, by means of fraud, theft and deception. Specifically...
   
   
   
   
4. Paper/Fiat currencies like the Dollar, Pound and Euro aren't money.
5. Private Institutions via central banks and government steal what purchasing power our currency has through inflation.
6. How our dishonest system of fractional reserve banking (FSB) evolved from the early goldsmiths of England issuing more receipts than the gold they had on deposit.
7. How FSB allows banks to lend money that didn't exist and charge interest on nothing.
8. How FSB causes inflation and with debt-money an increased burden of debt to be paid back with interest (also borrowed into existence).
9. How FSB allows banks to crowd out private lending because interest rates are lower than private lenders would lend at.
10. How the FSB system needs ever-increased lending to survive.
11. How FSB is the primary cause of the boom/bust or business cycle.

[*]How putting money in a bank is actually lending to a bank and how deposit insurance, if used, steals purchasing power from every person who isn't getting the insurance payout. Explain the difference between sight and time deposits.
[*]About interest rates and the function they provide.
[*]How the BofE artifically suppresses interest rates...

[*]
[*]encouraging malinvestment and excess lending by showing an unrealistic outlook (F. Hayek's work)
[*]crowding out private capital.
[*]rewarding borrowing and penalising savings, the lifeblood of investment.


[*]About the hidden effects of economics (Bastiat's broken window fallacy and Henry Hazlett's work)
[*]Most of all teach them about how monetary inflation. Specifically...

[*]
[*]How inflation effects the poorest the most, hurting the very people many of the politicians who find the system expedient for deficit spending claim to want to help.
[*]How it dilutes the purchasing power of money earned.
[*]How it's the most insidious form of tax, silent and without representation.
[*]Allows rampant deficit spending.
[*]Transfers wealth upwards from the poor and middle class to the rich.
[*]Harms savers, people on fixed incomes and people with pensions that aren't index-linked.
[*]Allows us to lessen our debt burden dishonestly with our creditors by repaying in pounds that are steadily worse less which is all well and good until our foreign creditors decide enough is enough and then we buy our own debt even more through quantitative easing, creating high to hyper-inflation.




I recently met Andy Burnham MP, because I'm a consitutuent of his and he honestly admitted he didn't have a clue about a lot of this. What chance do we have if our representatives don't understand the banking system? And to be fair, most people don't. That needs to change...

The main financial problem we face as a country as I see it is an enormous credit/currency bubble. There have been 3500 fiat currencies, and they've all failed. The most prosperous times in history were with a money system that was based on honest weights and measures. Our kids get an academic and professional education and zero financial education.

Wanting our kids to learn about money is a great thing but without understanding the system from a macro perspective it won't really help them and us in return very much. And with the enormous strides to take on the Federal Reserve in the US (see HR1207), what a time for us to do the same with the Bank of England.

Anyway, that's my two-penneth or rather two-poundeth. Incidentally, I'd love to hear Martin commenting on or debating these issues.

Spencerx

Quite a few years ago when I didn't have much money ,if any, to spare, I added up my incomings and outgoings making sure that my outgoings were more that incomings (which was almost true). I showed this to my 2 children and asked if they had any ideas how we were going to manage jsut tomake them think and realise that when I said I couldn't afford something I meant it. Even now when things are much better I usually only buy things I really need rather than things I just want. I have tried to bring my children up to be careful with money but feel I still have to keep an eye on them sometimes.
I think it would be a good idea if young people could have some sort of tuition in finances especially savings and pensions because at my time of life it is too late to pay into a pension scheme and I have no idea what advice to give my children.