Financially Illiterate

Clever and Financially Illiterate

Here’s a look into how our most educated young people don’t know the basics of financial literacy.

 

So young. So naïve.

You all know by now that as well as recently working for an Asset Management Firm and taking an online course about the same, I’m also a bit (okay…a lot) of a personal finance junkie. I opened my first savings account when I was 11 years old (before that I kept my pocket money in an old margarine tub, along with the ‘In & Out’ book that my auntie helped me to update every week), and I religiously saved 50% of my weekly part-time wage when I was at college.

Then I hit 18, and my college gleefully pointed me in the direction of University Applications, then cheered when I got my first-choice of placement.

Too bad they didn’t explain what a Student Loan actually was. In my mind, it was ‘free money’. Or at least ‘money I’ll pay back in the future’ – I didn’t even realise what the implications of interest were!

Obviously, it was up to me to read through the documentation carefully, strategise about my future, and consider the future ramifications of taking on so mu—

ahahaha. Yeah. Sure.

 

Fast-Forward 10 years

Since late 2017, I’ve been a mentor for students from the University of Leicester, where I did both my BA and MA degrees. Over the three months I spend with each mentee, I go through all the usual stuff:

  •  An overview of the Marketing & Publishing industries
  •  Where to look for jobs in these sectors
  •  Checking and improving CVs and LinkedIn profiles
  •  Places to up-skill
  •  Interview techniques

But the last session is always left to talk about financial literacy. I phrase it as “the stuff about money I wish I knew before I hit 25”.

I start with questions like:

  •  Do you have any savings?
  •  Do you know what an ISA is?
  •  How much Student Loan do you have?
  •  Have you thought about retirement?

The response is usually negative for at least two out of the four. Not one of my mentees have known how much debt they have – and why would they? It took me two years after finishing my MA to finally look at the paper and wonder why the number was going up every month instead of down. So I was almost 24 when I first really learned about the concept that interest works both ways.

 

Where we’re failing with financial education

At school and college, there’s barely any time to learn anything not directly related to the semi-useless parrot-answers we have to churn out for any given test. And let’s be honest, most financial courses are beyond boring.

But for our current system to push University as the be-all and end-all, and not deign to help students understand even the most basic of financial skills, is pretty disgusting.

The more I think about this, the angrier I get.

And some folks in older generations have the absolute gall to say that ‘youngsters don’t know how easy they have it’ or ‘they need to work hard and save’ and the worst, ‘well maybe if they didn’t have the latest shiny phone’…

…and it’s not just about young people, either. This ‘argument’ usually gets kicked at those in lower socioeconomic situations. I just want to grab them by the shoulders and say:

“Well whose fault is that, Derek?”

Maybe because they’ve never been taught, and saying ‘don’t buy stuff, save instead’ is so void of any sort of context of application that of course it gets shrugged off and forgotten. If anyone bothered to talk to young adults (and kids!) rather than down at them – and for finance not to be a taboo in the first place! Then maybe we wouldn’t be in this mess.

 

How to reverse the problem of financial illiteracy

After thinking a lot about this topic, I feel as though I’m missing something, because the ‘fixes’ I’ve come up with seem far too easy. Obviously, just doing what the list below says won’t suddenly cure everyone of their debt or stop folks from making some pretty bad financial decisions…but it will help. This isn’t rocket science, folks!

1. Financial literacy class in schools

a. Don’t tell me there isn’t time for it. PSE still exists. Drugs and smoking are bad. We get it. Let’s not spend three years teaching kids to refuse peer pressure. Take a term and get on with other important things.

b. Contextualise it. Age 16, (minimum working age), understand things like payslips and internet banking safety. Age 18, tell ‘em about student loans.

c. Upgrade for age. Sod it – why not have an intro class at University? I remember having a lecture about having a ‘stuff free life’ during the open day (and it’s something that stuck with both me and my grandparents, who came along), but that was it. I’m sure Chaucer won’t mind having one of his many lectures postponed. You could even make the lecture compulsory. (Although there’s an element of ‘well, we tried…’ if you don’t, which I’ll explore in a later article).

2.       Un-taboo it

a. Talk about finance at the dinner table, or at the pub, or wherever. Don’t use it as a chance to brag (or whine), but learn.

b. Women, ignore anyone who says that ‘ladies shouldn’t talk about money’ because it’s crass or undignified. No. Do you know what’s undignified, Colin? Not understanding how pension systems actually work when you’re already in your 40s!

Basically, it’s about education. The more (quality!) financial literacy we have, the better and healthier we’ll be.

 

To Conclude

Basically, financial education is crap. And parents who have been brought up themselves to view talking about money as crass, or simply ‘work hard and do well’ (which is also becoming increasing nonsense – sorry but it’s true!) simply cannot be expected to ‘know what they don’t know’.

As with so many social issues, we all need to do better with this. Start small – mention current interest rates when you’re out with mates for a drink (“Hey Cate, did you realise that glass of wine would have cost [Insert Amount] less five years ago?”) or ask your grandparents about their pension provisions because you want to learn about it.

Engage, don’t condescend.

Hasta pronto,
– Sara-Jayne

Related Posts

Why I'm paying my student loan

Why I’m Paying Off My Student Loan

[Important note: This was originally drafted waaaay back in December 2017] Pay-to-Play in Higher Education
Millennial Expat Pension Woes

Expat Pension Woes

Expat Pension? But I’m a Millennial! In a poll recently conducted by yours truly, 90%
Retirement Requirements

Retirement in T-Minus 16 Years

I want the choice to retire by the time I hit 45. That isn’t to

Leave a Reply