Why Are 1 in 4 Young People in the UK Broke?
Financial education in the UK is failing and teenagers are growing up totally clueless about personal finance.
The UK is the world’s sixth largest economy and yet we have a huge problem with financial literacy.
We simply aren't teaching it.
Why Aren't Schools Teaching Finance?
Study after study concludes that not enough attention is paid to financial education in schools.
Late last year, the Guardian estimated that despite personal finance being on the national curriculum since 2014, as few as 40% of schools actually teach it.
A loophole means that academies, free schools (and private schools) are exempt from honouring this obligation.
And of those teenagers that are taught personal finance, 58% feel its not taught properly.
How Bad Is the Situation?
The problem is made worse by the amount of consumerist advertising that teenagers digest these days.
There is an enormous amount of pressure on young people to look great, wear expensive clothes and live a lavish lifestyle that they simply cannot afford.
This might sound weird to older readers and - well, it is.
However, the pressures created by social media and reality television are very real and are only being understood now.
In an effort to keep up with the latest trends on social media and reality television, young people are putting their futures in financial jeopardy.
A recent study by a personal finance watchdog found that more and more teenagers are opening “store cards” without considering the huge amounts of interest they charge.
Financial Products Are Increasingly Complex.
Not only are super-risky assets such as cryptocurrencies making the headlines every other day, payday lenders are making a killing off indebted young people.
Most sensible people would never dream of taking a payday loan but unfortunately many young people are entirely unaware of the risks they carry.
High street banks are often little better. Many common credit cards carry extortionate interest rates if payments are made late - something that many young people are simply unaware of.
This shouldn't really come as a surprise, though. We're not teaching young people about these so they only learn about finance once they're in financial trouble.
In fact, the situation is so bad that the Financial Conduct Authority recently warned that companies must take steps to protect young consumers who don’t understand “potentially damaging financial products”.
And yet still nobody is stepping in to teach teenagers about personal finance and how to manage money properly.
The Result of All This?
Nearly one in four 18 to 30 year-olds is in constant debt.
Consumer debt in the UK now stands at around £200bn - almost as much as the government spends on the NHS each year.
The BBC found that one in ten young adults skip meals to make their paycheque last until the end of the month.
In the UK. The world's sixth largest economy.