AA Financial Services has given a warm welcome to the formation of the all-party political group (APPG): Financial Education for Young People.
Mark Huggins, director of AA Financial Services, says: “That more than 140 MPs are pledging their support for this is extremely good news, and not before time: this makes it by far the biggest APPG to date.
“It’s hard to get by these days without at least a rudimentary understanding of how financial services works and how best to manage family money such as savings, borrowing, credit cards and bank accounts.
“Too many people get into financial difficulties because they don’t know how to handle their money properly and if it were part of the national curriculum I’m certain that future generations will be much less likely to make the mistakes their parents might have made.
“Personal Finance Education Group, which is already doing a fantastic job helping thousands of teachers introduce family money matters into the classroom, is firmly behind this long-awaited initiative which should help get personal finance onto the national curriculum, which was after all on the last government’s agenda, sooner rather than later.
“I also believe that the financial services industry will throw its weight behind this initiative and help young people get to grips with their money. Overwhelming evidence shows that most young people are woefully equipped to deal with issues like their student loan, savings, paying rent, earning a salary and dealing with tax – never mind buying a car, paying for insurance, handling a credit card and so-on.
“These are basic financial considerations that have to be dealt with and getting an understanding of how money can work for or against them at an early age, is surely one of the most worthwhile things we can do for them.”
Recent research by AA Financial Services* showed many of those aged 18-22 have little grasp of common personal financial terms.
For instance, only half (55 per cent) understand AER (Annual Equivalent Rate - which measures savings interest rates). Some thought it was a Government earnings measure and a few thought it was a European air traffic control abbreviation. And although nearly three-quarters (74 per cent) know an ISA is a tax-free savings vehicle, others thought it was a unit of metric measurement or even an i-phone app.
Although encouragingly, more than half (57 per cent) of young people have savings, 46 per cent of them have no idea what interest their savings are earning. A third – 33 per cent – admitted that they have never checked to find out.
Adds Mr Huggins: “This tells me that we are leaving our youngsters poorly equipped to deal with the realities of looking after their money,” Mr Huggins adds. “That’s why this is such an excellent initiative and I hope it produces some positive proposals for including personal finance in the national curriculum.
“Moneysavingexpert’s Martin Lewis says that it’s a ‘national disgrace’ that we have ‘educated our youth into debt, but not about debt’ which in my view, very well sums up how we are neglecting young people.”