How much should education prepare people for personal finance in adult life?

lush_walrus

Maybe controversial but I think parents should take responsibility for teaching their children the things that are common sense - whether you have been good or bad with managing money yourself you will have an opinion and an experience to pass on.

School in my opinion is for teaching the skills parents don't have, not encouraging them to take even less responsibility in teaching their own children.

zagfles

lush_walrus wrote: »

Maybe controversial but I think parents should take responsibility for teaching their children the things that are common sense - whether you have been good or bad with managing money yourself you will have an opinion and an experience to pass on.

School in my opinion is for teaching the skills parents don't have, not encouraging them to take even less responsibility in teaching their own children.

But a lot of parents don't have the skills, as clearly demonstrated by the number who use payday loans, the number who get into trouble with tax credits overpayments, the number who get their holiday cash from high street travel agents or the PO, the number who haven't got a clue how their pension works etc.

securityguy

"School in my opinion is for teaching the skills parents don't have"

A large part of the population don't have financial skills.

Ilona

My mum taught me that if you don't have enough money, then you can't afford the item you want. You go to work, and you save up for it. That is the only rule I have ever needed. I leaned very basic sums at school but I hated it because I didn't understand it. I have no idea about interest rates, algebra, credit scoring, overdrafts, types of debt, pensions, calculating car running costs, discount percentages, foreign exchange, tax credits etc. I didn't learn anything about managing money at school, yet by following my mum's rule, I have never been in debt.

I suppose things are different now, people see what others have and want it for themselves. If adults can't get their heads round managing their own money, the kids haven't got much chance. The whole lot should be taught at school, starting in the juniors, where money comes from and how to save up for things, right through to senior school when they leave home and have to start running their own households.
Ilona

securityguy

"My mum taught me that if you don't have enough money, then you can't afford the item you want. You go to work, and you save up for it."

So no-one should take out a mortgage, but should instead rent until they've saved up the purchase price of a house to buy outright? That's a pretty harsh way to look at things, and rather unrealistic I would have thought.

"yet by following my mum's rule, I have never been in debt."

But you'll never own a house, either, I suspect.

lush_walrus

securityguy wrote: »

"School in my opinion is for teaching the skills parents don't have"

A large part of the population don't have financial skills.

But is that due to not having the knowledge or not applying it. Two very different things, applying knowledge is in a lot of cases the issue. Schools teaching what is a loan and that it needs to be repaid to a child is no more than any parent can teach themselves if they cared to.

lush_walrus

zagfles wrote: »

But a lot of parents don't have the skills, as clearly demonstrated by the number who use payday loans, the number who get into trouble with tax credits overpayments, the number who get their holiday cash from high street travel agents or the PO, the number who haven't got a clue how their pension works etc.

Do you really think that is through not having the skills? All financial institutions give warnings at every junction that the money will need to be repaid.

Do people really not notice that the amount they have been paid into their account is more than they expected? Or that if they take a loan it needs repaying. Pensions granted are slightly more advanced but I very much doubt a school would cover enough to really grasp the intricacies of investing either. But while my children are sitting through learning the basics they already know they are not learning something that would advance them.

System

It is an essential skill and should, in my opinion, be taught.

zagfles

lush_walrus wrote: »

Do you really think that is through not having the skills?

Yes. They don't know how to work out their tax credits, they don't know how to work out their taxes, so can't tell if something is wrong. They don't know how to work out the best deal for holiday cash, they don't know how to work out whether a loan is affordable, they don't know when and when not to borrow.

All financial institutions give warnings at every junction that the money will need to be repaid.

There's a bit more to loans than just understanding they need to be repaid:rotfl:

Some loans are almost unavoidable, eg student loans, mortgages. Unless they want to spend their lives in a low paid job in rented accomodation. Some loans can be financially beneficial even if credit isn't needed, for instance using credit cards and paying them off every month, and getting cashback. People need to understand how these work, how an interest change would affect them, when is the best time to pay them off, how APRs are worked out etc.

Do people really not notice that the amount they have been paid into their account is more than they expected? Or that if they take a loan it needs repaying. Pensions granted are slightly more advanced but I very much doubt a school would cover enough to really grasp the intricacies of investing either.

Why not? It's applied maths. How compound interest works, how geometric/arithmetic progressions can be used to work out how much they need to invest in a pension, for instance

But while my children are sitting through learning the basics they already know they are not learning something that would advance them.

That's probably because they don't understand the use of stuff like algebra, for instance. This could easily be taught in school as part of maths.

tomtontom

If a parent is incapable of teaching their child such basics then what else is the child missing out on?

Sad times.