The Need for Money Education (Feb 2005)

Article in House Magazine

February 2005

THE NEED FOR MONEY EDUCATION
Credit Action is a national money education charity dedicated to help people have "better thinking about money". Working with major companies, the Armed Forces and Local Authorities we produce a range of guides that help teach topics like budgeting, using credit wisely and making money go further. There are specialist guides for school-leavers, students, families and single parents for example as well as more general debt and money education manuals. As well as our own web site www.creditaction.org.uk that contains updated money and debt statistics we also have a specific money education site www.moneybasics.co.uk providing the "preventative" material to help individuals avoid the pain of debt we also recognized the need to work with a similar charity that provided the "curative" debt counselling that is so widely needed today. This is why we are delighted to be partnering with the Consumer Credit Counselling Service [CCCS] who are probably the largest debt advice agency in the UK and who provide totally free and confidential help to all in need on 0800 1381111. As a partnership we are able to offer guides, counselling and training to Human Resources personnel, employees, clients and customers.

We believe the issue of personal money education is vital. People in debt can lose concentration or take time off from work, end up in broken relationships as  result of the pressure or be visiting their doctors due to the stress. In desperation they may even end up stealing or tragically committing suicide.
Credit Action therefore strongly advocates:

• Basic money education material being put in to libraries, doctors' surgeries, rent and council tax offices etc. Many debt cases are triggered by "life events" and so the leaflets should be on the lines of "What do I do now..... I've lost my job/ we're having a baby / my relationship has failed etc". This low cost project would be highly cost effective and we believe would literally save the Health Service and companies millions of pounds.
• All organizations that deal with people struggling with debt should ensure that all staff are trained and all letters sent out "audited" by an independent debt counselling or money education charity. A couple of major organizations already do this to very good effect.
• People who are struggling with the lack of money should be helped through a properly funded Citizens Advice service. Those who have got
  into over-indebtedness because of borrowing should get free help through CCCS who get their support from the lending industry.

Lenders should take a much more pro-active approach to money education. Everyone benefits from having informed consumers. One way companies could do this would be to work together to produce some basic materials that would improve understanding. This could be followed by some form of "test", along the lines of the Learn Direct scheme, which when passed would lead to the "carrot" of people being able to borrow at cheaper rates in the future.

This is exactly the same principal as reductions in car insurance for those who have taken the advanced driving test. Credit Action believes that this would benefit the lenders, as they would have a more informed clientele less likely to default on their loans. Borrowers would equally benefit from being more informed and having the incentive to pass the test so they could borrow more cheaply in the future.

For millions of people in the UK credit is extremely useful and helps smooth out the peaks and troughs of every day life. It is vital though to help everyone make informed decisions and avoid the pain and misery that over-indebtedness undoubtedly causes. With over ten million adults in the UK currently having numeracy skills of an eleven year old or less, the need for financial education has never been greater.

Keith Tondeur
National Director
Credit Action
Howard House
The Point
Weaver Road
Lincoln
LN6 3QN
Office: 01522 699777