Money Education / Financial Literacy

• Instead of making the traditional new year's resolutions of losing weight or drinking less, many Britons intend to get their money matters in order in 2009, it has been suggested. Research conducted by Halifax Credit Cards has found that of those making resolutions, 57 per cent wanted to review their finances.
• According to research from CreditExpert.co.uk, the economic downturn may have broken the taboo of talking about money. The research reveals that more than half of us (53 per cent of UK adults) admit that we are now far more likely to discuss our personal finances today with other people than we were a year ago.

Young people (under 30) - the IPOD generation

• Research by Reform and Chartered Insurance Institute reveals that 50% of the 18 – 34-year olds surveyed had debts (excluding mortgages ) up to £10,000 and 20% had debts (excluding mortgages) greater than £10,000. Nearly a third of IPODs have no savings at all.
• FSA research shows that one-in-three students are constantly overdrawn; two-in-five students admit to being completely disorganised about their money; and one-in-three never check their bank statements or, if they do, they only check the final balance.
• The annual survey by Push, the UK’s leading independent resource for prospective students, has found that student debt now tops £4,500 for each year of study – a hike of 9.6% since last year.
• Students who started at university last year can expect to owe over £17,500 by the time they leave and new students should reckon on nearly £4,000 more than that. The national average projected debt on graduation now stands at £14,161.
• The average pocket money in 2008 was £6.13 per week, versus £8.01 in 2007. Three in ten children (30%) save some of their pocket money each week.

Spending

• Research from Mintel shows how fear of the recession is driving consumer behaviour more than an actual change in circumstances. The research found around a third of adults (30%) in Britain admitting they have cut back on spending mainly through fear of what may happen to their personal financial situation.
• The annual survey from Liverpool Victoria on the Cost of a Child shows that parents could spend £193,772 on raising a child from birth to the age of 21. This is equivalent to £9,227 a year, £769 a month or £25 a day.
• Petmeds.co.uk estimate that the cost of keeping a pet has increased by £7.6million a week in the past two years, with UK adults now spending £93.6 million a week on their animals.
• Research by WRAP (Waste & Resources Action Programme) has revealed that households in the UK throw away around a third of all of the food we buy.

Serving Debt

• A recent poll conducted by the Resolution Foundation found that nearly 3 million low earners now worry ‘all the time’ about their personal finances. This is double the number found in 2007. The poll also found that, today, nearly 90 per cent of low earners (people who live on annual household incomes of between £12,000 and £27,000) worry at least ‘sometimes’ about their personal finances.
• New figures from Unbiased.co.uk show that as a nation, we have worked the first 83 days of this year just to earn enough money to service the interest on our debts.
• According to YouGov’s quarterly ‘DebtTracker’ undertaken in Feb. 2009, only 37% of those who had ‘fallen behind with many bills or credit commitments’ sought debt advice in the previous 6 months. 65% of all those struggling with bills and commitments who do not seek financial advice thought they did not ‘need’ advice on their financial problems.
• Almost six million Britons fear their homes will be repossessed, according to research from Which?
• The Consumer Credit Counselling Service (CCCS) said fewer people are in a position to repay their debts:
• In 2008 only about a third of clients (35%) were able to commit to a Debt Management Plan (DMP) compared with 42% in 2007 and 46% in 2006.
• Clients seeking help are becoming more affluent: 12% have net household incomes of more than £30,000 a year and nearly half (47.4%) of those seeking help were homeowners.
• Homeowners owe on average 83% more than renters. The vast majority (90%) of CCCS client debts are on credit cards and personal loans, with the average client owing over £14,000 on each of these items.
• Almost two-thirds of Britons have seen their finances stretched by the credit crisis and recession, with 31% of households now so worried about the state of their finances that they are considering skipping essential repayments on credit cards, loans and mortgages.
• The number of people failing to keep up with gas bills has shot up by a third in the last year according to MoneyExpert.com. The number of people missing payments on gas bills jumped to over 1.6 million in the six months to January 2009.
• The number of people who spend more than they earn each month has risen to nearly 5.3 million according to Legal and General.

Savings

• Almost a third (32%) of the British population does not have money set aside to help them cope if an emergency were to arise.
• Prioritising spending and setting a clear budget could help people reduce unnecessary outgoings, whilst freeing up some additional disposable income to set aside in savings. This winter 30% of the British population confessed that they had spent more than they would ideally like, while 15% said that they do not know how much they should be spending each month. Reviewing income and outgoings may be particularly worthwhile for the 54% of the population that stated that they can’t afford to save, as their outgoings prevent them from setting more money aside.
• Almost a quarter of people (24%) say they didn't have savings two years ago and they still don't. More than a third of people (36%) say they have less money in savings now than two years ago, according to a poll conducted in March 2009 by moneysupermarket.com.
• Fairinvestment.co.uk estimate that 47% of UK savers have been forced to dip into their savings since the onslaught of the credit crunch, while 14% have either stopped saving or reduced the amount they save. Nearly a third of adults would face financial disaster within two months if they lost their jobs, according to research for MoneyExpert.com. Half of them (15%) believe they would only last a month.
• As many as 14 million people say they cannot afford to set aside money for savings. However, a financial experiment conducted by AXA reveals that in just three months Britons can train themselves to save without substantially affecting their lifestyle. The research indicates that Britons treat money left in their current account after bills have been paid as the amount they need to live on and set their standard of living accordingly. If money is paid into a savings account on pay day the research demonstrates that they change their spending patterns and establish a new standard of living based on their remaining disposable income.

The above information has been updated with statistics from Credit Action's Debt Report for May 2009.

What is the Solution?

FINANCIAL LITERACY: Financial literacy provides the foundation for SAVING and SPENDING wisely. It is the basis for the responsible use of money and making informed decisions that can have a major impact on one's life. The earlier a child starts learning about money, the more financially responsible and aware they are as adults.

So start teaching your children how to manage money from an early age! And remember that it is never too late to start!