Jane Goodland, responsible business director at Old Mutual Wealth comments:
“The report from the Institute for Fiscal Studies zeroes-in on Britain’s consumer debt challenge and makes the important point that not all debt is problematic. Debt can be used as a tool for building a more prosperous future, but it can also cause damage if it is mismanaged and leads to financial, emotional and psychological strain.
“Taking out debt is an important decision and people often face difficult choices when they think about what kind of debt to take on, how much they can afford and how they want to repay it. That all requires careful planning and we must ensure people are equipped with the right knowledge and skills to make informed choices.
“Decisions around whether or not to take out debt start from a young age – the IFS research shows that worryingly 14% of 20 to 24 year olds are already struggling under repayment pressure. This is why financial education is crucial. We know that our behaviours and attitudes toward money are shaped early on and it is important for young people to develop good habits, so they are equipped to manage the financial choices they will face as young adults.
“Financial education needs to be part of a multi-pronged approach to tackle the issue of problem debt. Measures to reduce reliance on debt, regulate credit and increase support for those struggling with repayments may help families struggling today. But that will not prevent future generations from suffering similar financial struggles. More can be done to address the lack of financial literacy many people suffer from, which is the result of inadequate financial education. Research shows being good with money is not only about numeracy, but about behaviours and attitudes which begin to evolve at a young age.”
Old Mutual Wealth supports KickStart Money, a ground-breaking collaborative project that aims to take financial education to over 18,000 primary school children and supports calls for financial education to become a compulsory element of the Primary National Curriculum.