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

AubreyMac

I think it would be useful to teach in school, it'll also be useful to some adults too as I don't know all about tax codes or how banks work.

AubreyMac

McKneff wrote: »

It amazes me how many people who have been working for years and are quite happy to let the tax man take a major portion of their salary and not know how/why/ etc.


Even 50 year olds come on and say 'I understand that I can earn 10,600 before I start paying income tax.


They have no idea how the basic tax system works.....

I'm one of those people (minus the 50 year old bit).

My understanding is that I pay tax for essential services such as hospitals and police and national insurance is paying for my future state pension, am I correct?. And to my knowledge it's not a matter of letting the tax man take the money, it's the way it has to be meaning I don't have a choice to not pay the tax.

System

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.

In an ideal world that might be the case but my parents consider their finances private, even when i did my student loan forms i never actually got to see any details of what my dad earns, i couldn;t tell you even now what wage he's on

I'd have liked to have learned it in school tbh, i think it might have been a useful use of the personal and social edication lessons which were mainly just people dossing around and nothing actually being taught

zagfles

onlyroz wrote: »

I'm not disagreeing with you, but I can just imagine the Daily Mail take on the concept of teaching tax-credit eligibility criteria to 15-year-olds

:rotfl:yes it could them up in arms, the idea that people are actuallly taught how our tax & benefits system works!

Of course I doubt they'd teach our system itself, that'd probably change several times before they're adults, they'd use a mythical country with similar rules so kids can learn techniques of applying the pure maths they've learnt.

zagfles

AubreyMac wrote: »

I'm one of those people (minus the 50 year old bit).

My understanding is that I pay tax for essential services such as hospitals and police and national insurance is paying for my future state pension, am I correct?. And to my knowledge it's not a matter of letting the tax man take the money, it's the way it has to be meaning I don't have a choice to not pay the tax.

But understanding how it's calculated so you can check you're paying the right amount, understanding tax reliefs available, understanding how to work out what is the best option, for instance you have the choice of a company car or an allowance, you have the choice of 2 jobs, one has a higher salary but a worse pension....all these make it important you understand how tax works. Plus of course if you're self employed you'll need to sort out all your taxes yourself, making sure you set aside enough to pay it.

Newlyboughthouse

lush_walrus wrote: »

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.

Yes. My friend was talking to me about getting a payday loan and I told her explicitly, oh god nooooo. That isn't even a last resort. It should be no resort!! Please please don't do it.

She agreed, but a few weeks later big fat did it anyway lol. So yes she had the knowledge, just didn't apply it.

SeduLOUs

I have some friends who have had the 'all debt is bad' message drilled into them by parents.

I've tried explaining how debt can sometimes be a good thing that can earn you money (stoozing) and that having some sort of credit history is absolutely vital if you ever intend to take out a mortgage, but it always falls on deaf ears.

When I try to explain that I have debt of £5000 that isn't costing me anything in interest, but that same £5000 is sitting in my bank account ready to clear the debt at any moment and earning me 4-5% interest they look at me like I'm committing some sort of fraud.

Interestingly, it is these same friends who have their savings in easy access sub 1% savers, never use a credit card to get protection on larger purchases, and haven't changed their gas/elec supplier in over 5 years. I've offered to help, but they 'aren't in debt' so there's no reasoning with them.

securityguy

"I have some friends who have had the 'all debt is bad' message drilled into them by parents."

And often the reason behind this isn't financial anyway, but various guilt/sin/shame/what would the neighbours say things. Like a lot of basic principles, it needs to be applied flexibly.

I don't have any long-term debt (I don't have a mortgage any more, even) but I as a legacy of the days when I travelled a lot for business I have a credit card with a limit equal to six months' pay, which I pay off each month. I use it for everything, including the supermarket. It provides lots of Avios, S.75 protection, assorted other special offers, and costs me nothing. It does mean that on the day the bill arrives I'm two or three grand "in debt". Meanwhile, my salary has been getting 3% or something in my current account.

To hear some people talk, I'd be better off with a cocaine habit.

Ilona

securityguy wrote: »

"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.

There's always one, isn't there. My parents rented throughout their whole lives, they never earned enough to get on the housing ladder. I rented from 15 to 27 until I got a good job and was able to save a deposit. Property is an investment, I don't consider a mortgage as debt, though technically it is. If I didn't pay a mortgage I would have had to pay rent forever like they did, and end up with nothing.

I am on my third house, upgrading each time to something bigger and better. I have been mortgage free for the past three years, so, yes, I do own my own house, all bought and paid for myself with no help from a partner.

My mum was a good teacher. She showed us her empty purse when we asked for something and she had no money to buy it. Parents who give in to their kids requests, then go into debt for it, are doing themselves and their kids no favours.

Ilona

zagfles

SeduLOUs wrote: »

I have some friends who have had the 'all debt is bad' message drilled into them by parents.

I've tried explaining how debt can sometimes be a good thing that can earn you money (stoozing) and that having some sort of credit history is absolutely vital if you ever intend to take out a mortgage, but it always falls on deaf ears.

When I try to explain that I have debt of £5000 that isn't costing me anything in interest, but that same £5000 is sitting in my bank account ready to clear the debt at any moment and earning me 4-5% interest they look at me like I'm committing some sort of fraud.

Interestingly, it is these same friends who have their savings in easy access sub 1% savers, never use a credit card to get protection on larger purchases, and haven't changed their gas/elec supplier in over 5 years. I've offered to help, but they 'aren't in debt' so there's no reasoning with them.

Yes it's like when I tell people I get foreign currency by withdrawing from ATMs abroad using my Halifax Clarity credit card. They are shocked that anyone would use a credit card to get cash. Yes it's a loan, yes you pay interest on it, but it's a much cheaper option than what most mugs do - trot off down to the post office or travel agent and get "commission free" currency with a large markup hidden in the rate.