Financial education for young people

Responding to a survey by NatWest, which revealed optimistic expectations amongst British teenagers about their financial situation in the future, the IVA Advisory Centre emphasised the importance of good financial education for people of all ages – and said that financial reality can be more harsh than many people realise.

Over two thirds of the 10,000 teenagers surveyed by NatWest said that their money management skills have improved during the recession, suggesting that the lessons learnt from the downturn have affected younger as well as older members of society.

NatWest said the recession “has exposed many young people to ‘adult’ money issues”, with things like a tighter household budget increasing financial awareness in this age group.

However, the research also revealed some unrealistic expectations amongst teenagers. More than a third (38%) of those planning to go into higher education said they expect to owe up to £10,000 by the end of their education. In reality, the average is closer to £20,000, according to the bank.

Similarly, many teenagers have optimistic expectations for their future salary. The average expectation for a starting salary was £11,600, followed by £31,000 at age 25 and £51,800 at age 35. The reality, according to NatWest, is an average of £10,195, £20,962 and £28,933 respectively.

A spokesperson for the IVA Advisory Centre said:

“It’s hard for younger generations to have a good grasp of what their finances will be like in the future, so it’s no wonder that salary expectations are a little optimistic. What is encouraging, however, is that more young people are thinking about their finances, which will hopefully lead to responsible financial decisions in the future.

“Debt has become a fact of life for many people – especially those who wish to further their education – and that’s fine, as long as the borrower is sure they can pay back what they owe. ”

“Inevitably, some people will find themselves struggling at one point or another – and then it’s a matter of knowing when to get debt help. There is help available for all levels of debt, and it’s important that anyone having problems with their repayments seeks independent advice at the first sign of trouble.”