Sunday, 10 February 2013

Modern Young Finance: weekly round-up 6


A generation Y-er’s verdict on the latest developments in the world of young people and personal finance.


The news many had been waiting for finally came through this week: financial education will now be made compulsory for all schoolchildren - subject to a consultation. Education Secretary Michael Gove yesterday announced a public consultation on the draft National Curriculum, which will run until April 16. Financial education will be taught in both mathematics and "citizenship" education. 

According to consultation documents, the new curriculum will teach pupils "the financial skills to enable them to manage their money on a day-to-day basis as well as to plan for future financial needs".

This news has been greeted with near-universal acclamation by those in the financial education arena, with Pfeg, Martin Lewis of MoneySavingExpert and MyBnk all full of praise for the announcement. However, MyBnk also advised caution, suggesting that Gove ought to go even further and make financial education a subject in its own right.

Those who are interested to see how they might cope if they had to take personal finance lessons should try The Daily Telegraph's quiz. 


Concerns about debt are growing north of the border, according to an investigation by The Daily Record. Apparently, nearly 400 Scots a day are contacting the Citizens Advice Bureau (CAB) over concerns about rising indebtedness. The CAB reports that, on average, they owe £15,000 each. And given that the national average salary in Scotland before tax and national insurance is £20,800, it seems that many Scots are in serious trouble. 

The main culprits fuelling the personal debt crisis are credit cards and payday loans, according to the research. 

For young people, the figures are particularly stark. Citizens Advice Scotland (CAS) chief executive Margaret Lynch felt that while debts had risen by 50% across Scotland since the financial crisis began, the number of young people falling into debt was especially worrying.

She said, "four out of five young Scots have been in debt by the age of 21, and a third have owed more than £500."

Yvonne MacDermid of Money Advice Scotland predicted that the problem would only get worse, especially with the threat of a triple-dip recession looming.


The debate about how to make planning for retirement more effective for young people rages on. This week, the National Post in Canada looked at the issue, and drew similar conclusions to comparable studies in the UK:

-The share of working Canadians contributing to work-place pensions has fallen in recent years. Just under 39% now pay into one, compared to approximately 42% in 1997.

- Young people can now expect to live for longer than their parents and grandparents, so they need to save considerably more to live comfortably these extra years.

- On top of this, young Canadians are beginning their working lives with debt from student loans, just as in the UK, which is putting them off saving until they have paid down some of this. 

-And once they do get around to saving, there are so many other, more pressing things to save for, like a car, or a deposit on a home. So pensions, which are 30+ years away, get put to the bottom of the list.

Does this report have ideas on how to get young people to engage with pensions? The short answer: not really. One thing is clear though: young people do worry about their futures. Unfortunately, they just have too many other commitments to think about, and too little disposable income. 


In a measure of just how far rental prices have increased in recent decades, a new report by housing charity Shelter has found that if food prices had risen at the same rate as house prices, the average weekly shop would now cost £453. This means that:

-a chicken would now cost £51.18

-a loaf of sliced white bread would cost £.4.36; and

-a bunch of 6 bananas would set you back £8.49.

This research comes as Shelter warns that housing is becoming unaffordable for millions of young people and families: in fact, a recent Shelter poll found that 59% of British adults now believe that they will never be able to buy in their local area.

Also this week, the Government's English housing study also found that homeownership in England has fallen to its lowest level since 1988. The average house price is now £163,000, which is 6 times higher than the average salary. Not only this, but just one in ten homeowners are now under the age of 35, yet more evidence that young people are being priced out of the market.


A new survey by Infosys, the technology and business consultancy, has found that younger people continue to worry about mobile banking security. It found that, while 45% of those aged between 18 and 29 use mobile banking, 47% of users and 63% of non-users would be reluctant to use, for instance, a phone camera to deposit a cheque.

This comes on top of recent data by the Pew Internet and American Life project, which showed that younger, more educated people are most likely to use mobile banking services.

If this is the case, it seems that more needs to be done to educate people about the advantages of mobile banking. Not only does it save time for busy professionals, it is also far more convenient than visiting your bank branch, or logging onto your computer every time you need to make a transaction.

Unfortunately though, changes in attitudes towards security are lagging behind the march of new technology. Until more is done to convince the average person - and technologically savvy young people in the first instance - that mobile banking is a safe option, further advances will be some distance away.

Perhaps one solution might lie in altering the payments landscape to let more smaller competitors in? At the moment, people rely for the most part on a handful of providers - 97% of young people in a recent survey revealed that they only used PayPal for online payments, for example - and more competition could hopefully lead to more innovation.


The employment minister, Mark Hoban MP, this week congratulated Max Kirby, who was unveiled as the winner of the HJI-Reed essay prize. The competition was launched last year by the Henry Jackson Initiative, and Sir Alec Reed (of employment agency fame), and invited anyone aged 18 and over to write a 1,000 word essay on ways to cut youth unemployment.

Meanwhile, the Local Government Association is concerned that efforts to get young people back into work are being hampered by excessive red tape and bureaucracy.

It believes that a more local approach could help the young people find work more easily. It criticises what it calls an extremely complicated and expensive system, which has 33 different national schemes, which cover 13 different age boundaries. 

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