Young people and finance

14 Oct 2016

On 11 October NYA associate director Jon Boagey gave evidence to the House of Lords’ select committee on financial exclusion. Here’s a summary of what Jon discussed.

We need to understand the financial challenges within the context of young people’s lives.

For the majority of young people the late teenage years and early adulthood are times of transition and change.

We’d like to think that this is a period of hope and opportunity, but for many it is characterised by great uncertainty.  This is a generation for whom:

  • long-term secure employment is unlikely for the majority. Work is often low wage and temporary and this impacts on savings and spending patterns. With the youth unemployment rate currently standing at 14%, young people are three times more likely to be out of work than any other age group.
  • educational qualifications (including degrees) are often insufficient as a passport to employment – it is no coincidence that many graduates are leaving university and then applying for apprenticeships.
  • owning their own home is out of reach for the majority; many are dependent on the private rental sector if they leave home, or are staying on in the family home for longer.
  • Significant aspects of young people’s lives are negotiated on-line, including consumer purchases, bank accounts, transactions with government and official bodies. If you have access to credit spending is very easy.

It is not difficult to understand the connection between these aspects of young people’s lives and financial exclusion.  A regular income and access to credit or savings is really important as a means to security and opportunity and its absence makes saving money more difficult – this is not rocket science.

Those young people who have limited access to credit, savings or income are more vulnerable, particularly families with low incomes/ parents out of work and young people with experience in care or on the edge of care.

We also need to understand the role that young people’s personal and social development plays in their life chances.  There is a growing body of evidence that shows they are as important as formal qualifications in supporting young people’s life chances.  Some young people live chaotic and complex lives – coping with difficulties and challenges can have a huge influence on their ability to manage daily transactions and decisions.

Financial education

Financial education is now on the national curriculum. This basic introduction needs to be followed up when it is of greatest relevance – at key moments in young people’s lives.

Key points at which services should be include:

  • engaging with the Youth Obligation
  • starting an apprenticeship
  • leaving care
  • starting work
  • moving into independent accommodation

Some of these life episodes would require engagement and commitment from the private sector but could be delivered locally and co-ordinated by the voluntary sector.

We are also moving to a point where we need to see investment in services of this kind as of long-term benefit –by creating an improvement in young people’s financial skills we are able to save costs later on – for example in sustained tenancies or apprentice completions.

NYA worked with Barclays and a wide range of voluntary sector organisations to train young people as peer educators, reaching  over 120,000 young people by training 5,000 ‘money champions’.    Young people were not advisors and knew the limits of their role, but they were highly effective in having engaging conversations with their peers about money – phone contracts, simple budgeting techniques, risks of store cards etc. and then refer their peers on to experts.

We need to think differently about how we think about managing money and get closer to what young people need. This isn’t just a job for schools. In particular we need to listen to what young people have to say themselves – and understand their needs as clearly as we can.

Government can play a role in joining things up.  If financial education is going to work it needs to be co-ordinated. Someone needs to hold the reins and make sure young adults get access when they need it.

For further information please contact Jon Boagey.