Young people lack financial skills

Young people are entering adult life with “dangerous gaps” in their financial knowledge, according to a new survey.

Under 25s are showing worrying gaps in their financial knowledge relating to bank statements, overdrafts and interest on loans, according to a new survey from Barclays and charity pfeg (Personal Finance Education Group) to mark the beginning of My Money Week, which runs June 3 to June 9.

Of those surveyed, 42pc could not interpret the difference between being in credit and overdrawn on a bank account statement, while more than a third did not know the correct meaning of APR in relation to interest charges on loans or credit cards.

Around one in eight (13pc) did not know what an overdraft was, with 8pc thinking it was a low-cost one-off loan from a bank.

Tracey Bleakley, pfeg chief executive, said: “It is clear that many young people are entering adult life with dangerous gaps in their financial knowledge that could lead them into serious financial difficulty.
“These findings underline the need for all schools to teach their pupils about personal finance, to equip them with the skills, knowledge and confidence they need to manage their money well.”

Financial education will likely become compulsory in schools across England for the first time next year, following its inclusion in the new draft curriculum.

Personal finance is already taught in schools in Wales, Scotland and Northern Ireland.

The Money Advice Service released research last month which found that most children’s financial habits have already been formed by the time they reach seven years old.

It published a report compiled by behaviour experts at Cambridge University, which found that most seven-year-olds have already grasped how to count out money and know that it is used to buy goods. They have also worked out what it means to earn money and what an income is.

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