A payday loan to buy a pizza? Real life stories that show why financial education is so important
Monday, December 8, 2014
Learning from your mistakes is part of growing up - but young adults simply can't afford to learn about money this way, as these stories show.
It probably comes as no surprise to find that young people are vulnerable to making bad financial decisions - particularly when they first have access to credit.
The Money Advice Service (MAS) undertook a major research project earlier this year to find out what kind of financial mistakes young people make, and how we can avoid the same happening with future generations.
Three in five 26-29 year olds who took part in the MAS research said their biggest money mistakes were made when they were aged 18 to 22. Luckily, some of these people are sharing their stories so that other young people can learn from them and avoid making the same mistakes.
Here are some of the interviews taken from the MAS report: It's time to talk: young people and money regrets.
"I had run out of money until pay day, but all of my friends were getting take-away pizza, and I didn't want to be left out... so I 'Wonga'd'... for a Domino's pizza. I feel ashamed of it now, but at the time there was literally no other option!"
Michaela, 20, student, Cardiff
'We're students, we all run out of money, that's just the way it is! Best way to deal with it is to go out with your friends on a night out and play credit card roulette... you are all skint, but you all put your credit card in a pile ... whichever one gets picked has to pay! I can easily spend £100 without thinking about it."
Martyn, 21, student, Glasgow
Then there's Mina's story. When she received her first credit card at age 18, Mina went on a shopping spree and spent £1,500 in just a few hours. Seeing it as 'free money' and giving little thought to the consequences and mounting interest charges, Mina soon found that it became unaffordable on her sales assistant wage. Now aged 24, she's only just finished paying the debt off.
How can we help to prevent this?
Imagine if that was your child or grandchild talking? We all hope our children are going to be sensible with their money, but the truth is that we need to help them by teaching them how to manage it.
Financial education is now being taught in schools, which is really good news, but we can all also help to ensure that future generations understand the importance of saving and don't end up with large debts.
Find out more about how finance is being taught in schools, and easy ways to teach your children about money at home.
This blog is intended to provide information, not financial advice, to help you make an informed decision about savings and investments. We do not offer financial advice. You should contact a financial adviser, who may charge a fee, if you want financial advice.
Source: It's time to talk: young people and money regrets, The Money Advice Service, Sept 2014. (p16, 25)
You may also be interested in:
8 tips to help reduce credit card debt quickly
Find out how to save up to £550 more a year