Young people haven’t a financial clue, OECD study finds
Oh, how we laughed at the ‘tracker mortage ad’ - well, it's exactly what students need now
“I don’t know what a tracker mortgage is” - still from a now classic TV ad from the Financial Regulator
The next time your teenager smirks at you for asking what a bitcoin is, try asking them about interest rates on a tracker mortgage and watch that smile disappear.
A recent test by the latest OECD Programme for International Student Assessment, found a quarter of students are unable to make simple decisions on everyday spending. Unsurprisingly, the figures get worse the more complex the issues get.
Only one in 10, for instance, understand income tax, so you can likely forget about interest rates on loans and other important financial matters.
We all remember the Financial Regulator’s ad campaign set on a bus a number of years back. “I don’t know what a tracker mortgage is,” confessed the first passenger to his fellow commuters, before several others, emboldened, followed suit.
The novel production was designed to inform less than financially savvy punters that it’s nothing to be embarrassed about, and that help is out there. The ad, which admittedly attracted a degree of satire, helpfully directed people to the regulator’s website, where information and advice was available.
The survey showed that more than half of students hold a bank account, but almost two thirds do not have the skills to manage it
Cantillon wonders whether something similar could be done for the current crop of young people who may be able to navigate bitcoin and the cloud but do not understand basic financial literacy.
Indeed, with the age group targeted by the study on the verge of having to make key, long-term life decisions such as taking out a mortgage, it’s vital that people know exactly what they are doing and what they are getting themselves into.
The survey showed that more than half of students hold a bank account, but almost two thirds do not have the skills to manage it and cannot interpret a bank statement. So, time to get cracking.
As always seems to be the case, better-off students scored much higher in the OECD test than less-advantaged ones, so perhaps the focus should begin in less well-off communities.