Simon Read: Financial ignorance is no excuse for not helping those who are facing extreme money problems
Simon Read is Personal Finance Editor at The Independent. He edits the Saturday Your Money section and writes the Daily Money column and Wednesday’s Midweek Money section in i newspaper. He also writes for the news and business pages of the Independent and i newspaper and is a regular money commentator on TV station London Live. He has won numerous awards including Consumer Finance Journalist of the Year.
Friday 02 November 2012
The big thing about falling into debt is that it can end in disaster. If you borrow more than you can afford, it can be very hard to wrest back control of your finances.
I mention that because this week I've spoken to quite a few people who have faced a financial abyss and recovered. The road to potential financial ruin is different for everyone.
In the case of Adam Brown, featured on page 53, it was a mixture of having difficulty in making the transition from a military life to a civilian one, compounded by being made redundant twice in quick succession.
With some of the other people I've spoken to this week they've fallen into debt because of other problems, such as a drink addiction or substance abuse. I'll be writing more about those in future weeks. Yet others have suffered financially because they've been tempted by easy credit to spend more than they can afford. I've written reams about the wrongs of those companies that push expensive credit onto vulnerable people that can't afford it.
But that doesn't mean that I'll be having a pop at irresponsible moneylenders and legal loan sharks this week. Instead I'd rather focus on the help that we give to desperate people. Or rather I'd like to highlight the fact that the help offered is often woefully inadequate.
While some of you may dismiss those that do get into debt difficulties as being 'weak' or in troubles of their own making, I don't believe that we should then abandon them as a lost cause.
What I've discovered from those I've spoken to this week is that there's a great will to survive. The constant message is that "If I'd known about this or that before, I would have got back on track much more quickly."
That means that we should do everything we can to give people the tools to get themselves back on their feet. If that means helping them to go through bankruptcy, then so be it.
If it means a less drastic approach to their finances, then we should provide experts that can sit down and give people one-to-one advice in budgeting and spending sensibly.
If it means ensuring that they do claim for all the diminishing benefits out there, then we should ensure they know what's available. And we should do what we can to get rid of the stigma about claiming benefits.
We should also do what we can to make people realise that there's no stigma in asking for help with finances. That's a product of a long-standing tendency to ignore money issues which was neatly demonstrated this week. Research by Moneysupermarket revealed that 2.68m of us have forgotten direct debits that take cash out of our account each month.
The fact is it's not so much that we've forgotten them, it's more the fact that we don't pay attention to our statements, either out of fear of reading some bad news or simply because we think we have better things to do with our time.
But ignoring finances is, frankly, a first step to cash confusion and, possibly debt disaster. The problems actually stem deeper than ignoring finances, of course. A key problem is that when many of us think about money it's only about how we can make more.
And that's simply wrong. Rather than thinking about how quickly or simply we can make money, we should be focusing on how we can make the most of what we actually have.
The fact that millions of people are paying £300 more a year for their home energy than they need to is a clear signal that we have a national problem because of money ignorance.
That doesn't mean we all need to become spendthrifts or money-saving bores. But it does mean we need a change in our attitude to money. In short, becoming more open about money is key so that the natural ups and downs of anybody's life don't become simply a series of debt disasters. That sounds simple but it's the problem that the Government-backed Money Advice Service has consistently failed to grasp.
The MAS reported figures this week that suggest it will fall massively short of its target to generate one million personal action plans for consumers by the end of March. But that's not the biggest disappointment about the MAS.
That's the fact that it doesn't help those that really need financial advice - people in debt who think there's no way out of their predicament. A clever little website won't help them even with the tens of millions of pounds that the government has poured into it.
Such people need face-to-face aid. They can get it at Citizens Advice but, frankly, the service hasn't anywhere near enough resources or expertise to help the millions who are struggling.
What's the answer? I don't know. But I'll be looking at different solutions around the country in coming weeks to give authorities food for thought. We simply can't afford to fail to help those if financial trouble. After all, the next person could be you.
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