We have a huge problem. As a nation, we have an extremely low level of education when it comes to money, below the global average according to some reports, and it’s screwing up our health, life and wellbeing. Did you know that only 38% of UK adults know what inflation is? And that one in four students do not consider a loan or bank overdraft as debt? It’s time to take drastic action. I present to you my five-point plan.
1. Don’t focus on anyone aged over 65
Sorry, controversial I know, but by the time you’re 65 you’ve pretty much made all your money mistakes. You can’t exactly switch career or accelerate your retirement plan. The best you can hope for is to be smarter with what you’ve got, improve your budgeting skills and maybe down-size to free up some money from your home, but you’ll know all this already. Whatever we come up with by way of an education plan will help all age groups, but to prioritise, let’s zone in on the core of the problem and save future generations from committing the same catalogue of errors…
2. Go back to school
It’s never too early to start teaching our bright young things the importance of managing money and living well for less. In fact, the sooner the better. Toddlers should be counting pennies not chickens, early teens must have a good grasp of income, bills, mortgages and tax returns, and by the time they’re 16 everyone should have a decent understanding of macro-economics – inflation, GDP, interest rates, foreign exchange and investments.
3. Create pioneers
It’s hard to spread the word alone, or for a government department to enforce change like a frowning school teacher. We need to work from the inside out. So, first of all, let’s create pioneers and champions who will advocate and educate on the ground in their immediate environment.
All local communities – schools, churches, sports clubs, charities, companies, political committees, hobby groups – they all have some kind of financial representation, someone who does the accounts or sets up the taxable status and manages the inflows and outgoings.
These people are gold dust and should double up as living-breathing finance gurus to whom we can all put our everyday money questions and conundrums. They’ll be rewarded handsomely by the government for their efforts and others in these groups will aspire to become a financial guru themselves and earn an extra income.
4. Keep it simple, keep it real
There’s so much crazy jargon around when it comes to money, it’s no wonder our knowledge is so low. The whole thing is a bore, a turn-off at best; a cumbersome, patronising beast at worst. So let’s not talk about ‘financial literacy’ as the industry so loves to do, let’s talk about ‘money knowledge’.
From there we need to create nudges and money rules for people that are a true reflection of their lives. There’s no point telling someone to save now for their pension in 30 years time when they have a 3-year-old to feed and energy bills to pay and it’s still 2 weeks until payday when they can hopefully pay off a slither of their mounting debt. Give them tips and tricks to help make the weekly shop go that little bit further. A brilliant recipe for sausage casserole that serves 10 portions at 30p each, for instance, is far more likely to get them engaged and kick-start some conscious thinking to help plan their spending in a smart, meaningful way.
5. Go on tour
Now is not the time for a government-led TV and poster campaign. It’s no good projecting these messages from an ivory tour and hoping they’ll land. That is so 1960s and simply not relevant to the modern day. We need the right messages to be out there, on the streets, all day every day.
All employers should be encouraged and incentivised to have lunchtime drop-in sessions in the workplace and post useful money tips in emails or on screen-savers and exciting desktop visuals. Shop receipts are the perfect time and place to remind people how much they just spent (or saved) as a proportion of their income and life budget. All this data can be seamlessly absorbed into an app that displays a constant reminder of how well you’re doing on a scale of 1 to 100, by the day, the week, the year and even over your entire life.
One final point… Knowing ‘how well’ you’re doing with money should never be related to how much you’re earning. That would simply exclude the lower earners altogether and give the high earners an undeserved pat on the back for their ego but very little else. It’s a fallacy anyway. Most millionaires are actually plain awful with money. Low-income groups and the self-employed are far better with their finances and plan long term for an easier life, without seeking out short-term windfalls.
It’s all about increasing your money skills, not your income. That way, it’s a badge of honour that anyone and everyone can wear.