Book Review: "Money Fight Club" by Lindsay Cook and Anne Caborn

@Sophie Robson



We have known since the financial crisis that there is a gap between ordinary people's financial knowledge and the level needed to understand even simple financial products. Like-for-like products are notoriously difficult to compare, and the financial services industry does not always make it easy for us to do so. Nor has the government made it particularly easy for ordinary people, with its relentless intervention into pensions policy, tinkering with rates of inflation, and latterly, changing the entire regulatory structure, with the breaking up of the FSA. Although it looks as though banks are increasingly being held to account by the government, the media and taxpayers, consumers still need to do their bit to equip themselves with financial knowledge. 

The problem with most people is that, at some stage in their lives, they have missed out on the basics. Numerous studies have found that young people feel confused and lack confidence when faced with ‘money issues’. Jargon holds many back: one study, published by MRM, found that young people are more likely to understand a foreign language than some basic financial terminology. Sadly, this can have a detrimental effect when it comes to making important financial and consumer decisions, with all too many people feeling powerless to challenge banks and businesses, and too willing to give up when faced with injustices, such as misselling.

Luckily, a new e-book; "Money Fight Club", by Lindsay Cook and Anne Caborn, arms them with enough knowledge to navigate their way through any purchase. This is a concise guide to knowing your rights, whether you are buying a loaf of bread, heating your home, or opening a savings account, and should be regarded as a blueprint when making any major consumer decision.   




"Money Fight Club" assumes little prior knowledge, and covers a wide range of scenarios. It teaches you how to make a complaint, by email or by phone - looking at body language and tone of voice for face-to-face issues and for written complaints, stylistic aspects, such as who to address it to, and how out to find details like this. It you through the psychology of merchandisers: apparently, giving you too much choice, and offering confusing 2 for 1 deals is a well-known marketing technique - confusion marketing (should have guessed by the name really). 

There is a much needed section on knowing your rights, which lays out relevant legislation on important matters such as the Sale of Goods Act, Trade Description Act, Consumer Credit Act, Distance Selling Regulations and the Data Protection Act, all of which govern where you stand if a purchase you make turns out to be less than satisfactory. Moreover, there is a comprehensive list of schemes and regulators - from the Financial and Pensions Ombudsman Schemes to Ofgem (the energy watchdog), Ofwat (water) and Ofcom (communications - so TV, postal services and satellite companies to name a few). Everyday decisions such negotiating household bills are also dealt with in detail. Tips are given on how to avoid paying extortionate charges on gas and electricity - or at least how to anticipate these bills more easily. As for water, well, it seems that this was charged at a fraction of the cost of today's prices before privatisation took place in the 1980s... 



But this book comes into its own when dealing with financial matters. An ongoing concern is that consumers are not given access to the information that would allow them to fight their corner successfully. "Money Fight Club" does a great deal to put this worry to bed. It helps the reader through the array of financial products they are likely to encounter: pensions, savings accounts, current accounts and credit cards to name but a few, and demystifies the language that holds ordinary customers at the mercy of powerful financial institutions. It takes both a historic look at financial services, running us through recent misselling cases, such as PPI, as well as explaining how to avoid getting into similar situations in the future, and making your money work harder for you.

This is exactly what we need in today's world: a clear, concise guide to help people take back control of their finances. As the authors assert, the fightback has indeed begun.       

Modern Young Finance: Weekly round-up 4

@SophieRobson2

Overview

There was bad news this week for the UK economy, as it was revealed that it shrank 0.3% in the last three months of 2012. This led to renewed concerns that the UK could slide back into recession. It remains to be seen how this might affect young people in the near future, although it is difficult to imagine how they could collectively be much worse off, being disproportionately affected by almost every policy decision and economic twist and turn.

The latest ONS figures on unemployment underpinned this. The overall unemployment figure fell by 37,000 to 2.49 million - the lowest level since May 2010. Unemployment figures for those aged between 16 and 24, on the other hand, actually rose by 1,000.

However, there is some positive news for current account holders, as the OFT drew up new recommendations in its review of bank current accounts.

And there are more news and views from experts on the future of financial education.



Financial Education

The debate about making financial education compulsory in schools rages on. A week after Thomas Docherty MP presented his private members' bill to Parliament, the Financial Times dipped its toe into the debate (no link here due to FT copyright, but click here to access the website. It looks at a school in West London where very sophisticated financial education lessons take place. Pfeg, MyBnk and DebtCred are all mentioned. As I write, this, the All Party Parliamentary Group for Financial Education for Young People's 150 page report is being looked over by the Department for Education.

Meanwhile Redington, the independent investment consultancy, has launched RedStart, a financial literacy and entrepreneurship education programme, which aims to "build confidence, drive and ambition in young people in London". It hosted its first crash course with a group of 12 and 13 year olds from Lister Community School in Newham, East London. See here for more information on the scheme.



Investments and savings

Last week, I discussed options for first time buyers looking to get on the property ladder, particularly Barclays new Family Springboard scheme, which allows buyers to get a decent mortgage with just a 5% deposit... providing their parents - or another relative - are willing to link some of their savings to the loan.  This week, The Guardian has laid out more alternatives to Family Springboard, including Lloyds TSB's Lend a Hand scheme (which requires the relative to put up to 20% of the house value into a linked account, but in return for a slightly better mortgage rate - as little as 3.99% for a Lloyds current account holder). Encouragingly though, there seem to be a number of similar deals out there as well, notably the Aldermore Family Guarantee Mortgage, where you can get a 100% mortgage, as long as a relative can guarantee borrowing above 75%.

Anything that helps young people get in control of their finances, and gives them the chance to escape the woes and insecurities of renting, has to be a positive step. However, I do worry that this will exacerbate the divisions between the haves and have nots - and lead to even more disaffection amongst those from less wealthy families.

Banking

The Office of Fair Trading has raised concerns over the limited choice of personal current accounts. Its latest review found that banks are not doing enough to make accounts good value for money for consumers. It also criticised the larger banks' hold over the majority of the market: it found that Lloyds, RBS, Barclays and HSBC make up 75% of the market (although it did acknowledge newer entrants, such as M&S Bank and Metro Bank). The news that the Co-operative bank is to close 37 branches across the country does not help matters.

Young people stand to lose out if banks remain uncompetitive and ill equipped to meet customers' needs, especially if they find it difficult to change accounts easily.

Encouragingly, the OFT also included some recommendations in its review. These include exploring the option of retaining account numbers, even if a customer moves to a new bank (in a similar manner to mobile phone numbers), making annual summaries of accounts available throughout the year rather than simply being sent one a year through the post (to make comparing accounts easier) and better advertising of a text alert system which lets customers know when they are nearing their overdraft limits. I look forward to seeing these recommendations being put into practice - after all, they appear genuinely innovative and relatively simple to implement across organisations. (Incidentally, an earlier blog on the Fairbanking Trust highlights some of the most customer-centric accounts on the market today).

Employment and Education

With the news from the ONS that youth unemployment has risen, and a study by the IPPR think-tank that these figures could increase even more over 2013.

Luckily, there is some hope, as a new initiative is about to be launched by the Financial Skills Partnership. The GetinGeton programme is an industry led e-learning project aimed at giving 16 to 19 years the necessary skills and knowledge to break into the financial and professional services sectors. Young people taking part will have the chance to take part in online learning modules and access to professionals in the industry who will be on hand to have e-conversations with them about careers and working in the industry.

The FSP is still looking for e-mentor volunteers for the scheme, which will begin in April 2013. Click here for more information on signing up.

Modern Young Finance: Weekly Round-Up 3

@SophieRobson2

Overview

 

Well, 2013 is finally with us and the first round-up of the year is dominated by pensions and financial education. Steve Webb MP, the Pensions Minister, revealed plans for a new, simplified payment system, which, he hopes will make pensions fairer for low earners and working mothers. We, in turn, look at how it might affect younger people.

 

Also this week, there has also been much debate centred around financial education: a private members' bill by Thomas Docherty MP was introduced on Friday Jan 18, although the formal implementation of financial education lessons in schools looks to be some way off. (You might want to take a look at the blog I published earlier this week in response to the detractors of this initiative.)

 

Other topics this week include a new US study on credit card debt amongst young people, and the implications it may have on similar problems in the UK, and the pummelling that savings rates are getting at the moment as a result of the Funding for Lending scheme. We hope this won't encourage younger people to stick with saving for the short term at the expense of effective long-term financial planning.

Pensions
 
The Government's White Paper announced on Monday unveiled sweeping new changes to the basic state pension. Under the new rules, which are due to be implemented from April 2017, all new pensioners will qualify for a 'flat-rate' payment of £144 per week. The aim is to simplify pensions - currently, the basic rate is £107, with various means-tested top-ups. 
 
It should also make retirement planning easier, especially for young people, who stand to benefit more over time from higher risk investments than those closer to retirement. A flat rate for everyone and the disappearance of pension credit for low earners will circumvent the need for means testing.  Under the means tested system, the level of savings an individual had was amongst the factors taken into account when considering how much pension credit to be awarded. This meant that, perversely, lifelong savers risked being penalised. This should change - and anything that encourages financial prudence and forward thinking ought to be considered a good thing. 
 
But, unfortunately, where young people are concerned, simple does not always mean better. Many of those retiring (read the IFS's analysis here) after 2050 could actually be worse off under the proposed new system, as they will have to work longer - the retirement age is set to increase to 66 from 2020 and 67 from 2026 - and will, from now on, have to pay higher National Insurance contributions. 
 
You can read the White Paper here and anyone still unclear can contact the Pensions Advisory Service
 
Debt 

 

US research has found that young people are paying off credit card debt more slowly than previous generations - and this has implications for their UK counterparts. The study, from Ohio State University, was based on 13 years worth of data, and involved respondents aged between 18 and 85 years of age. It found that not only do those born between 1980 and 1984 have substantially more debt than their parents' and their grandparents' generations, they are also paying it off more slowly - about 24% slower than their parents, and about 77% more slowly than their grandparents. This is coupled with the fact that younger people have higher levels of student debt, so may find it harder to pay back unsecured debt.

 

The authors were concerned that this could encourage a future debt crisis - when these young people become elderly, it is likely that they will still be indebted.

 

However, the 2005 Bankruptcy Abuse Prevention and Consumer Protection Act has led to higher minimum repayments on credit card debt, and the authors of the report predict that this could jolt younger people into paying their debt back more quickly. This is because it will help to prevent interest payments from building up, and may even eliminate debt several years early. The UK Government looked at increasing minimum payment requirements on credit cards back in 2009, see the Consumer White Paper here, but little has changed tangibly over here, despite strong support from campaign groups. 

  

Savings

 

We'll have to wait to see new developments unfolding in 2013. There does seem to be an emerging new pattern though, of young people looking for savings accounts which offer easy access to their savings. This is no doubt because of the uncertainty surrounding pensions and savings at the moment.  

 

One of the chief threats to interests rates and hence long-term savings for young people is the current uncompetitive nature of savings accounts. We are likely to see more and more savings accounts closing, and interest rates on savings staying low as the Goverment's Funding for Lending continues to batter returns. The Funding for Lending scheme was introduced to give banks access to cheap money to encourage them to lend to consumers - primarily to help more (young) people onto the housing ladder. While it has led to a modest increase in mortgages taken out over the last quarter, it has had the unintended consequence of cutting rates on savings accounts. An article published in the Daily Mail says that nearly all rates are now below 3%, since banks have less need to raise capital in this way.

 

This article also touches on an ongoing Financial Mail campaign, to double the cash ISA limit to £11, 280 (which is currently the combined limit for cash and stocks and share ISAs). Currently, you can only save half the maximum allowance in cash, even if you don't want to invest in stocks and shares. You can read more about this scheme, which is backed by a number of banks and building societies, as well as MPs, such as Alun Cairns, here.

Investments

 

Unfortunately, not much change here. Would-be first time buyers are still being frozen off the housing ladder, and saving for deposits is still daunting. However, an interesting article in the Evening Standard this week pointed to a new loan (this one is from Barclays, although other major banks will surely follow) which allows parents to use their savings to help their children get on the property ladder. Rather than having to use their savings, like other guarantor mortgages, parents are able to keep their savings in a separate deposit account. They will receive interest on this, and can withdraw their cash after three years, providing their children stay up to date on their mortgage repayments.  
 

Financial education 
 
A new report submitted by the All Party Parliamentary Group on Financial Education for Young People to the Department of Education called for more personal finance education for schoolchildren. Chair Justin Tomlinson MP said "We feel we have a duty to make the next generation of consumers be in a position where they can make informed and savvy decisions." This tied in neatly with a private members' bill (read here) launched by Thomas Docherty MP on Friday in a bid to make financial education part of the national curriculum.
 
Tomlinson and the APPG were perhaps also inspired by the unlikely news which emerged last week that bankers could soon be giving financial education to young people. Plans under consideration could see representatives from banks including Lloyds, Barclays and RBS giving financial advice to schoolchildren from 2014. Speaking for the APPG on financial education again, Justin Tomlinson, explained that children could benefit from the greater depth of knowledge of these bankers - after all, teachers have only been trained to "a certain level" in financial education. In my opinion (read my recent opinion piece here), anything that brings the educational world and the business world together is beneficial: after all, it is surprisingly easy for those in the financial services sector to overestimate the level of financial knowledge many 'lay people' have, and vice versa.
 
 (You might also be interested in reading about Pfeg's centres of excellence programme, which trains teachers to teach financial education). 

 
Education and employment
 
More encouraging news here. A survey by High Fliers suggests that there could be 2.7% more jobs for new graduates compared to this time last year. However, the report emphasises how crucial work experience is for graduates in finding employment - graduates with no work experience at all would be unlikely to get places on the most prestigious graduate schemes. 

Formal Financial Education: a response

Twitter: @Sophie Robson2

Financial education has been much in the news this week, in anticipation of Thomas Docherty MP's private members' bill to include financial literacy in the national curriculum. Many organisations believe that personal finance should be taught to young people, to enable them to make the best financial decisions for them - Pfeg, in particular, and MyBnk, have done much to bring this issue into the national consciousness. As the author of a report on young people and financial services, I believe that it is crucial that young people are offered some education in finance.

But this view is not without its detractors. Others believe that financial education is ineffective: after all, they argue, learning about finance at school is surely dull, and it is very difficult to measure any impact. Two articles in particular - Matthew Lynn's in MoneyWeek and Sophie McBain's in the New Statesman - stand out. Both make strong and eloquent arguments against the inclusion of financial education at school. 



Lynn (article is unfortunately subscriber only) believes financial products should be more user friendly and easily understood from the outset. It is a dysfunctional and uncompetitive financial market, he argues, that causes the misselling of financial products and complicated products He feels that this is something that could be better remedied by improvements to the banking industry, not by teaching young people to understand the complex products and terms that they might encounter.

McBain, meanwhile, actually cites my report which found that 66% of young people aged 18-25 received no financial education at all at school or university. She feels that it is the financial professionals, especially the financial advisers, and not the general population who should be getting more financial education. She cites a communications professional, Christopher Jones-Warner, who estimates that only about 22% of his financial services clients are actively planning for retirement. If these people aren't savvy about financial planning, the argument goes, what hope is there for the rest of us? 

Both are right of course - financial products do need to be simpler to understand - you have only to look at the confusion surrounding pensions to see that how damaging this can be. And of course financial advisors, and anyone working in the financial services industry for that matter, should be competent and responsible when managing their own finances. 


But it seems to me that both of them significantly overestimate the amount young people do know about financial services. A number of those quoted in the report felt confused about its jargon: many were uncertain about simple concepts such as APR and compound interest. More alarmingly, of those who were contributing to a pension scheme (another hot topic this week), more than 40% had no idea what type they were paying into. And as for student loans, several even admitted that they had not known that interest was payable on it. In other words, many young people lack basic knowledge, and the evidence above shows how it is already affecting them. 

It is certainly true, as Matthew Lynn writes, that in order to get a good deal on a mobile phone, it is not necessary to understand about the inner workings of a mobile phone, any more than learning about bricklaying and cement mixing will help you get a good deal on a  mortgage. But those who advocate financial literacy teaching in schools are not expecting their students to become experts: they are simply hoping to give young people access to information that might protect young people from hardship in the future. After all, loansharks are still rife in many impoverished areas, and student loans are going to continue to plague young people long after graduation, and saving for a deposit on a first home is likely to play on young (and not so young) minds until banks begin lending more freely again. 

I look forward to seeing Docherty's members' bill on Friday. It is unlikely to be perfect: after all, how it can be squeezed into an already packed curriculum is already contentious, and purely theoretical, classroom based learning won't be sufficient to capture schoolchildren's imaginations. But it is certainly a step in the right direction.   

Modern Young Finance: weekly round-up

A weekly round up of all the developments in the world of young people and financial services. @SophieRobson2

OVERVIEW

Young people and finance have hit the headlines this week in the build up to the holiday season, because of the expenses attached to present buying and party going: apparently, many young people are struggling to afford even the basics of living. Renting and its associated expenses have almost dominated, as younger people continue to find themselves shut off the property ladder.





EMPLOYMENT AND EDUCATION

A poll of almost 400 NEETS (young people not in education, employment or training) by advice service Future You, found that many of them, not surprisingly are struggling to make ends meet. 63% say they cannot afford the dentist, 67% find it hard to pay for food, while 70% are having trouble paying their bills. Moreover, 82% found meeting the cost of travel difficult. And as for Christmas, 47% felt they wouldn't be able to pay for Christmas dinner, while 92% couldn't afford to buy gifts.

They were less than cheery about their future chances of employment as well: 60% didn't feel confident about their prospects of employment in 2013.

As for education, figures this week from the admissions body UCAS found that there has been a record fall in the number of people taking up places at UK universities this year. Nearly 54,000 fewer people than last year started courses this autumn than in 2011. Reasons for this are thought to be down to the rise in tuition fees to a maximum of £9,000 per year in England. However, there was some good news. Apparently, this 'correction' has led to more applicants being accepted at their first choice institution, and those from disadvantaged areas are increasingly winning places at the top universities.




SAVINGS AND INVESTMENTS

Housing woes continue this week for young people. Yet another survey, this time by the IPPR think-tank has shown a significant gap between young people's aspirations of owning a home, and the harsh reality they find themselves in. According to the survey, 51% of young people aged between 18 and 30 no longer believe that they will be able to afford to buy a house in the next 10 years, even though 88% wish they could. The survey also found that being shut out of the property market was affecting young people in other ways too, now that 3 million people aged between 20 and 34 are still living with their parents. 26% felt that their housing situation prevented them from being able to achieve important life goals, such as starting a family. 17% feel that their housing issues have a negative impact on their relationships. It seems that not only is the lack of affordable mortgages preventing young people from building financial assets, it is also preventing them from moving forward in life.

Another piece of research found that over the last five years, parents have provided over 228,000 first time buyers with more than £1.31bn in deposits, with parents giving or loaning, on average, £13,000 - up from £10,000 five years ago. And as if that wasn't bad enough, another survey has found that servicing an interest-only mortgage on an average property in the UK is £1,080 per year cheaper than renting. If only...

Savings accounts have also suffered a blow, as it was found that 351 savings accounts have disappeared from the market entirely this year - with 191 being withdrawn in November alone. This has been put down to the Funding for Lending scheme, which was introduced to help reduce the costs to banks and building societies of providing loans to people looking to get on the housing ladder, since the interest rate is no longer sustainable on some of these accounts. However, I wonder if, in the long run, this might make savings accounts more simple: after all, too much choice can often be a bad thing.

Meanwhile, the Huffington Post (US) is encouraging younger people to make riskier investments, contrary to what their parents might tell them. It seems they should take the amount of time they have until retirement into account, as well as the possible returns on riskier, higher yield investments.



FINANCIAL LITERACY

There was concrete proof this week that a lack of financial literacy can have serious implications both on personal finances and on a national scale. A survey for moneysavingexpert.com by the Centre for Economics and Business Research found that financial illiteracy costs the UK up to £3.4bn a year.

It claimed that better financial literacy could reduce the risks of unemployment by 10% and help reduce the unemployment subsidy by taxpayers by £600m, as well as helping reduce the levels of personal indebtedness in the UK and helping people to plan more effectively for their retirement. A separate study by Skills for Life found that one in four adults has the mathematical skills of a nine year old, struggling with even basic sums.





PENSIONS

About a million low paid workers - mainly women - are set to miss out on vital employer pension contributions after the government again raised the threshold for the minimum income at which autoenrolment applies, this time to £9,440 per year. Women - and young people - are most likely to be affected by this change, as they are more likely to take on low-paid or part-time jobs.

More encouragingly though, a Standard Life survey revealed that 54% of young British employees are keen to know more about autoenrolment. Those aged up to 35 are significantly more keen to learn about it than their older counterparts - just under a third of 35 and overs say they are interesting in finding out more - perhaps, the survey writers feel, because they felt they had already "missed the boat", while those aged under  30 felt they "had all the time in the world".

Modern Young Finance: weekly round-up

A weekly round up of all the developments in the world of young people and financial services. @SophieRobson2


OVERVIEW

The Chancellor's Autumn Statement this week was greeted with mixed responses. Although slight increases in personal tax allowance (which will rise to £9,440) and increases to the ISA contribution limit (to £11,520) and for businesses, a 1% cut in corporation tax were welcomed, these changes were thought to be too small to really have an impact on people's working lives, especially those of young people, who are increasingly being squeezed by a lack of employment opportunities and steadily rising rental costs, amongst other things.

SAVINGS AND INVESTMENTS

It was also reported this week that even second time buyers are turning to the Bank of Mum and Dad for help in upgrading their homes, as upgrading to a house with a second bedroom can set buyers back an average of £91,000. So even if you do manage to buy that first home, your troubles are far from over.

The Autumn Statement brought some relief for first-time buyers: although there was no mention of a return to the stamp duty holiday, the Chancellor did promise to continue with the Funding for Lending scheme, which enables banks and building societies to borrow from the government in order to accept more mortgage applications from first-time buyers who might not have built up substantial deposits. However, the deposits that most mortgage lenders require are still too high for most first-time buyers, so it is unlikely that this will have much impact in the short to medium term.

The government will also increase the amount of bankable annual gains from investments by 1%, and is also set to expand the number of investments which might be included on a list of stocks and shares lsas - which could be good news for young people who already have investments - as they are the group most likely to be investing in higher risk categories, and stand to benefit the most over the longer term.

FINANCIAL EDUCATION

Some welcome news from the world of financial education, albeit from the United States, as a recent report suggests that young people (aged between 16 and 29) may actually be one of the most financially literate age groups, because of the importance that they place on getting a decent report on their savings accounts. Recent research found that 25% of people in this age group put saving as their top personal finance priority, compared with 9% in the over 65s category.

Nebraska's board of education proposals for standards in social studies has put new emphasis on personal finance, as a result of the struggles many young people have faced as a result of the recession. 

Over in Malaysia, a new financial literacy programme, "My Finance Coach" has been launched by Allianz. This initiative was founded in Germany in 2010 and  aims to improve the money management skills of young people, by training volunteers to be My Finance Coaches and getting them to run classes on money and finance for people aged between 11 and 18.

PAYMENTS

Last week, we discussed several new payments platforms designed specifically for children. This week, a similar system has been set up in the US, called Virtualpiggy.com. This website allows parents to control the money their children can spend online, while allowing children to manage money to buy things online. Crucially for the parents, it doesn't actually hold any money, which means that no personal information is needed for registering, but instead it operates as more of a management system, so that children can see how much they have saved and how much more they need to save. In turn, parents can keep track of how much money is in the account and decide on the items that their children can buy. A number of merchandisers have already signed up to the scheme, including Claire's, a jewellery store.

EMPLOYMENT

A poll by law firm Irwin Mitchell found that more than half of businesses want to see the default retirement age reinstated to free up employment opportunities for able younger employees. The default retirement age was scrapped in April 2011 in an attempt to eliminate age discrimination and increase tax receipts. Many of the firms surveyed were finding that many younger employees were leaving to join rival firms because of the bottle neck that was being created in their current firms by older workers staying on past the traditional age of retirement.

DEBT

The growing problem of debt amongst young people was again brought to our attention by the story of Toby Thorn, 23, who took his life when he ran into debt as a result of student and credit card debt. This is compounded by increasing rental costs - by some estimates, these have risen by 20% in some parts of London, while wages for under 30 year olds have fallen by between 6% and 10% over the last decade.

Payday loans once again made the headlines this week - for the wrong reasons - as it emerged (in research by Insolvency firm R3) that nearly one in ten people were considering taking out a payday loan to help meet the costs of Christmas. Step Change Debt Charity also reported that the number of people seeking help with debt from payday loans has soared by 300% in the past 2 years. It might be worth taking a closer look at how this problem develops once the new interest rate caps are put into place...

There was some good news this week though for those who pay out regularly on train fares. The government agreed to cap fare increases at 1% above the rate of inflation rather than 3%, which should help to ease the burden on regular commuters.

Kidtrepreneurs: making business work for children

When 11 year old Jack and 9 year old Lucy had some time on their hands during the last school holidays, they decided to use it wisely. Spurred on by their idea to create an app, they eventually came up with Mooey and his Mates, an interactive iphone app based around Lucy's cuddly toys. Their father, a graphic designer, then put it into action, and the app went live.

But they have since taken the idea further. They decided to promote their app at a local trade fair, but knew that they would need more than just an app to sell it, so they came up with the idea of making Mooey merchandise, including mugs, aprons and iphone covers to develop the brand. Not only that but they learnt some invaluable lessons on business and enterprise, learning about upselling and cross selling, for instance. They have also been able to conduct some vital market research on their friends, a few of whom have even downloaded the app.



And though remarkable, Jack and Lucy are far from the only young people in the world of business. Over in Acton, Texas, there is even a young people's entrepreneur fair, Acton Children's Business Fair, where children as young as 6 (and as old as 14) try and impress an elected panel of local business people, who judge the youngsters on their pitch, their product, and the marketability of their idea.

Several initiatives in the UK are also in place. On the Money, an initiative with Education Scotland, for example, has run a series of talks with notable entrepreneurs, including Sir Tom Hunter, Scotland's richest man, and former owner of Sports Division, and Nicola Morgan, author of 'Charlie Fly and the Nice Dream' who proves that a knowledge of business and money management is crucial to professional success in any walk of life. She actually describes herself as an entrepreneur - for to be entrepreneurial, she says, you have to be able to use your own ideas for a practical purpose.



There is also MyBnk, a social enterprise based in London, which runs workshops for young people aged between 11 and 25, which teaches the building blocks of money management and business with practical lessons. For instance, earlier this year, it launched a 'bank', where school children run a bank using their classmates' savings as deposits, which they can then lend out to community projects, in order to learn more about how the financial system works. Since it was founded in 2005, it has worked with about 50,000 young people. This once again shows that these skills are very useful for teaching children about business, but absolutely vital in gaining independence and financial well-being.

This highlights the growing importance the government and other organisations are placing on teaching children and young people about enterprise. The economy has changed, and good A-levels and solid university degree are no longer sufficient if a young person wants to make themselves stand out from the crowd. Increasingly, entrepreneurial flair is becoming important, not least for the characteristics you have to possess to be successful.