Kate Hughes: Legacy lessons still have not been learned
Saturday 11 August 2012
In case you missed it amid the infectious enthusiasm of the "Hoy" polloi, this week marked the fifth anniversary of the beginning of the credit crunch. Sixty months, 260 weeks or, give or take, 1825 days that has required tough money management, clever budgeting and a bit of hoping for the best just to keep many of us afloat. So have we, the banks, the regulators and the government, learned our lesson yet? It seems not.
As the parliamentary inquiry on banking standards prepares to get under way in earnest, and another swathe of banking scandals comes to light, a Which? report has found 71 per cent of people still don't think UK banks have learned their lesson from the financial crisis, up from 61 per cent in September 2011.
Meanwhile, back in the real world, consumers continue to bear the brunt of the recession with the same Which? wellbeing survey showing that nearly half are worried about mortgage rates and the level of their household debt.
They might be right to worry. Although the average unsecured household debt had been holding a fairly consistent downward trend until January 2012, this year it has started to creep back up, Credit Action has found.
With this level of financial fear, it's no surprise that yet more research has found the over-35s would be keen to provide financial advice to give their younger selves, from saving earlier to dealing with debt, says insurer Bright Grey.
But what was that insane figure about this same generation borrowing off their parents? Ah yes, 4.4 million adults each borrow an average of £47,000 and change from their own parents during their grown-up years, says LV=. So despite the past five years of tough times, the message about sustainable and informed finances still doesn't seem to be getting through.
With rogue banks and the economy flat at best, it's clear that self preservation is the only way out. But to save ourselves, we need to know what we're doing.
"We have to ensure that future generations have the confidence, skills and knowledge they need to cope with future economic crises and periods of recession," says Tracey Bleakley, chief executive of the Personal Finance Education Group. "How do I set a monthly budget? How much of my salary should I be trying to put aside in savings? What can I do to protect myself against a loss of income? These are all questions that millions of people have been faced with over the last five years as the financial squeeze has taken hold.
"High-quality financial education from a young age would have put squeezed Britons in a much better position to be able to make the right choices. This is why financial education needs to be a part of the school curriculum, so that future generations are able to make informed decisions about their finances, in good times and in bad."
And yet there are still no plans for compulsory financial education in schools.
The British Olympic Association and the government talk about the effects of the London Games on our well-being, on our health and even on the economy. Even when money is tight this legacy will quite rightly lead to increased funding for sports in schools. But while I applaud those actions, isn't now, finally, the time to address the legacy of the credit crunch?
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