In my second interview, I am talking to Sara Williams on the topic of learning about money.
First of all, tell us a little about yourself
I live in London with my springer spaniel. My two adult children have at last left home! I am a debt adviser at Citizens Advice and have run the Debt Camel website for four years.
How did you become interested in finance?
I did economics at university, but there I was mainly interested in macro economics rather than people’s personal finance problems. I have always read the Money sections of newspapers. When I became an adviser at Citizens Advice in about 2002, I learned a lot more about the whole range of financial issues that people have to deal with and then specialised in debt.
Were you taught about money whilst you were in school?
Not that I can remember.
How should students today be taught about money?
I think the basics can start in primary schools. Young children love playing shops, and there is no better way to realise why you can’t buy everything you want than by having a certain number of coins you have to hand over. Along the way they will pick up a lot of number skills at the same time.
At this age it’s important to use physical money, or tokens. It may seem fun and modern to use some digital tools, but this makes the topic too abstract before a small child is ready. Something happens, you aren’t sure what, then you can’t buy any more…that isn’t nearly as good a lesson as holding 10 tokens, handing over 6 and feeling you only have 4 left, then realising you can’t buy something costing 5 as you don’t have enough.
How about secondary school students?
I think kids need to do a lot of very practical activities:
- Fill out a passport application form, make a list of all the things they need to get to send with it, and work out how much it will cost them.
- Learn to read a bank statement and know what the difference is between a standing order and a direct debit.
- Have their homework to research the cost of a contract for a mobile phone and then spend the lesson comparing what people have found.
- Write an email to the council telling them you are moving out of the area and ask them to stop charging you council tax.
- Research what you options are when a mobile phone contract comes to an end and how to switch to a different provider.
- Make a couple of lessons a term looking at MSE’s weekly tips email – it’s a great way to cover a lot of topics and keep the children interested.
For over 16s, this can then extend to drawing up a basic budget and talking about the extra costs you get when you have a car or rent somewhere.
This is all a long way from talking about ISAs and pensions and investments. That’s important, but children need a sound grasp of the basics of personal finance before they get to them.
Credit, Utilities, Insurance, PPI, Scams. Personal finance can sometimes be overwhelming but a problem in one area can be life-changing. Should we prioritise what we teach? If so, how?
I think all of those are important! And if everyone has a lesson every week in secondary school, they should all be able to be covered. These lessons should not be boring if they are practical. Every child is interested in money and how they will cope with it later. Keep it real, not abstract. There should be no need for tests or exams.
Should schools bear most of the responsibility for improving financial literacy? Or should the primary responsibility be placed somewhere else?
Schools need to do a lot more. But so do the financial service providers – they need to start using plain English, aiming at a tabloid reading age, and less small print. And the regulators can help by insisting on this.
As a debt advisor, what is the most common problem you see that properly implemented financial education could help to solve?
Problems never get less if you ignore them – whether it is a parking ticket you don’t think is fair, a water bill that is too high to manage or a loan you can’t repay. Children need to learn how to complain and appeal for some problems and ask for time to pay for others.
Once outwith the school system, where should people go for financial advice?
That depends on what the problem is. For debt advice, always go to a charity such as Citizens Advice, StepChange or National Debtline. Not the commercial companies that pay for adverts on Google offering “little known governments schemes that will write off 80% of your debt” – because those schemes will generate a lot of fees and may not be in your best interest.
I am a great believer in going to a mortgage broker not applying directly to a lender. And choose the broker yourself – don’t just go with the one the estate agent wants you to use.
A quirky question to end, if you could give every student one blanket piece of financial advice, what would that be?
Don’t borrow money where the repayments will take longer than what you are buying will last. It’s fine to get a mortgage or a student loan if it will help your career. But this year’s holiday needs to be paid for before you go on next year’s holiday. And if you only make the minimum repayments on a credit card, it will take 15 or more years to pay for those new clothes – long after they have been thrown away.
Finally, where can people find you?
Sara offers some really useful advice which schools could implement. I like the idea of focusing on practical activities. Theory has it's place but getting students to compare mobile phone contracts, writing e-mails regarding council tax to local councillors. These would really cement this type of education in the real world.
Speaking of commercial companies that offer financial services, with fees attached, people have to be wary. You see this in the PPI reclaim sphere with companies offering to make a PPI claim on your behalf (with a fee). This, when free PPI claim tools are available online. Financial education is life-long but starting early and practically, is important.
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