Young money mentors – two 14-year-old high school pupils from Lancashire – were the star guests invited by Iona onto on this morning’s Young Money Young Rights on Share Radio!
Co-presenter Iona also looked at this week’s autumn statement by George Osborne and at whether credit unions should be seen as an alternative to payday lenders – as celebrated in a credit union rap!
Iona said most of the financial world had this week been focused on what George Osborne was doing for the grey vote but there were two big announcements affecting young people
For the first time there will be automatic entitlement to a student loan of up to £10,000 a year for postgraduate and Masters courses for those under 30.
Improved funding for postgrads will be across all areas, but Iona suggested it could be a shot in the arm for the government’s campaign to encourage more children to go into the vital STEM subjects – science,technology, engineering and maths
Iona with Emily and Patrick
Dr Steve McCabe of Birmingham City University said there had been a massive drop-off in postgrad education in recent years He said it is the postgrad degrees that are more about finding creating solutions for industry, and we need these skills to help us out of the economic crisis.
But he worried that we are loading people with ever more debt
Richard Lloyd of Which? said that when students are now paying more than £9000 for their course they need to do their homework to find out what they are going to get for their money
On the importance of non-academic factors in choosing a course, Iona said this matters when employers are looking at you in the round – sports and music for isnatcne allow you to become more disciplined and better at time management. But she stressed that it’s the quality of your degree that really matters
The second big item in the Autumn Statement was on apprenticeships – Iona said we all know how important they are for young people and for industry, and the Chancellor’s scrapping of the requirement for employers to pay National Insurance for those under 25 can only be a good thing.
Iona said stamp duty has long been under attack, and according to an EMoov survey 29 per cent of buyers are deterred from buying at all by stamp duty. Iona said: “I have known young people who have put off buying a home even if they have as deposit because the extra cost was just too much for them.”
But one fly in the ointment could be upward pressure on prices, with more people encouraged to become private landlords, and potentially higher rents
Iona in the studio with Georgie, Emily, Patrick and Brian
Iona has been looking into why young people are more likely to turn to a payday lender than a bank to fund their festive purchases
Citizens Advice Bureau recently revealed that 62 per cent of callers aged between 17 and 25 are struggling with debt as a result of payday loans, with only 8 per cent are having problems with credit cards and other borrowing
Payday loan companies are specifically targeting students and young people with broker websites, many of which are specifically targeting students and other vulnerable consumers
“If you type payday loans into Google you will find ‘loans for young people’ ‘loans for 18-year-olds’ even ‘loans for poor people’,” Iona said.
“You could argue that bank loans are an option and they should be stepping up to the plate and providing short-term loans. I gave a talk at one of the big four banks recently and senior figures they told me there was no way banks could do it.”
Iona went on: “Credit unions have been put forward as the obvious ethical alternative to the high-cost borrowing phenomenon, in fact there has even been been a rap commissioned by the Church of England to celebrate credit unions…………”
Iona said the problem is credit unions can only legally charge a maximum 42 per cent APR making it difficult for most to offer short-term borrowing “Only a handful of them have moved into the quick loan market for that reason….what they need are financially stable members who are saving into their coffers all year round.”
Credit unions believe if you can’t afford to save you can’t afford to borrow.
“ I think it’s time to get back to basics – have a look at your recent bank statements, if the cost of that night out shocks you, if you spent more than you bargained for at a particular online store, it’s time to get some strategies in place.”
Iona talked about the marshmallow experiment – where people prepared to wait for two marshmallows rather than take the one in front of them were found to be more successful in life – suggesting that deferring gratification might be the way to go.
She also mentioned the ‘free money’ current accounts from First Direct and M & S Bank which offer incentives to switch your bank account
Iona was joined in the studio by two young money mentors “who are so good with money they have been teaching other young people” – high school pupils teaching primary school pupils about money.
The merry band of Money Mentors from Southlands High School
Emily Cook and Patrick Farnworth both aged 14 came all the way from Chorley in Lancashire with project champion Brian Souter of the Debt Advice Foundation
Emily said everyone has to deal with money at most stages of their life and “we strongly believe it is something people should be strongly educated in, but unfortunately it has it has been missed out of the educational system”.
They work with a programme of 6 lessons on dealing with money which are taught to years 5 and 6 in primary schools
Patrick told Iona young minds were easier to mould. “They will listen to people, older ones don’t see the point, people in our secondary school for instance listen to these lessons and say –‘ so what, I’m not really that bothered’. Grown-ups make rules they don’t understand, but we are their age and our voices are more valued by them.”
Emily: “We go right from the basics, prioritising what they are spending on….. looking at the world of work, planning ahead, making sure they can avoid bad debt.”
She told Iona they had used a puppet show to illustrate the dangers of payday loans. “Being student teachers we can do tasks with them in a fun way so they enjoy the lessons.”
Iona put the young mentors to the test. “If I gave you £40 right now, what would you do with it?”
Patrick said he would spend it – or three-quarters of it anyway.
Co-host Georgie Frost asked what he would spend it on. Patrick: “Not sure, I’m sure I’d find something once I were outside.”
Patrick told Iona there was such a thing as good debt. “When you go to university you are inevitably going to end up in debt unless you are from a very rich family and not many people are, so you go and buy a course and get a loan for that. That is good debt because you only pay that loan off when you are in an job, earning at a certain threshold.”
Iona asked where Emily and Patrick get their knowhow from. Parents had helped, Emily said. She told Georgie pocket money was a good starting-place.
“When you go to a shop and say ‘oh Mum I want that little pony there’– it’s like with the marshmallow thing you were saying before – if the kid wants the pony now they might be able to get it, but if they saved up for a bit longer they might be able to get the whole big set with all the accessories and that’s a bit more exciting.”
Patrick said he got a £5 weekly allowance and could get school dinners or a packed lunch. “It’s up to me how I spend it, it’s like giving me a little responsibility and dipping my toes in the world of money.”
Iona asked Patrick whether packed lunches were the way to go. “I think they are definitely, because there’s nothing wrong with a good packed lunch…When you buy meals at work it is usually quite expensive and it might not be as high quality as your packed lunch could be.”
Brian Souter, education manager at the Debt Advice Foundation, said the project had started from one money diary in one class, comparing a family that got into debt and one that didn’t, had been turned into a lesson, and had spread.
“We now have 11 secondary schools who are money mentor schools going into 80 primary schools receiving the lessons.” Pupils were now writing a lesson on university and what you should and shouldn’t do, for use in secondary school.
Iona asked how the project fitted in around exam pressures.
Emily: “ When you want to do something you get it done, it has become a priority as I enjoy doing it and it is not a burden to me…I started it last year before my exam year began..you get great feedback and a great experience.”
Brian: “We want people to be well qualified and get good exam grades but it is not many hours and look at what the young people gain in terms of confidence, communication skills, working together, writing materials……. We have quite a few money mentors who want to be teachers…what a way to find out whether they like this or not, at the age of 14.”
Is it cool to learn about money? Brian: “We have found out that the whole concept of financial education in primary schools should have started in primary schools, as Patrick said, because attitudes are formed at a young age.” But making it cool to learn about money was crucial. Children reacted very differently to being taught by pupils only three years older than them, and “the results we are getting are very very positive”.
Iona asked how the project had affected the two young mentors’ career ideas. Patrick is intrigued by money but wants to go into science. Emily likes the idea of teaching.
Listen up again next week!
Young Money Young Rights on Share Radio
9.15 on Friday mornings