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Hospital and training begins in earnest

So I have 17 weeks to get myself sorted out before the Sandman triathlon in September – and it’s a daunting prospect. I’m relatively happy with the running and cycling (although there’s plenty of r…

Source: Hospital and training begins in earnest

Are young women falling behind young men in the financial education stakes?

Research by the Insolvency Service has found that young women are overtaking young men in the indebtedness stakes. According to the study, last year 7.8 women aged between 18 and 24 in every 10,000 adults became insolvent, compared with just 4.0 of men of the same age. This trend also continued in the 25-34 year old age range – with 32.8 in every 10,000 adults declaring themselves bankrupt compared with only 25.6 of men.

This is quite alarming and unless something is done to halt this, the UK could face a ticking time bomb of increasingly indebted young women.

The findings are doubly shocking when you consider that men also earn more than women. Recent figures by the ONS found that men earned on average £546 per week, compared with just £449 for women. Further research, by the CSFI think tank in 2012, found men were also more likely to invest in riskier, higher returning assets than women, so while women savers are less likely to lose their capital, they are perhaps more likely to see inflation eating into their savings.


So what is causing this disparity between women and men? According to the Insolvency Service, retaining unsustainable lifestyles is a big problem for women, especially in a digital age, where looking good and being seen with the right accoutrements is of manifest importance.

More significantly, there is a lack of adequate financial education. According to the CSFI report, more than 70% of the young people surveyed said they had not had any financial education at school, although most of these said they would have welcomed it.

But how can education close these gaps? Well, as I mentioned in a recent conference speech for Professional Pensions, while it is important to demystify the jargon in financial services, it is equally, if not more, important that prudent spending and saving become habit – without sufficient help, there is a risk women will fall further and further behind men.

A recent article in the Telegraph suggested it might be the connection between money management and maths that is at the root of the problem. There may be something in this, given the lack of women who pursue maths and science beyond GCSE level. There is certainly evidence that women lack confidence when it comes to money matters.

The UK refused to participate in the most recent OECD study on financial literacy, despite the fact that 18 other countries took part, suggesting the government is well aware of its failings in this respect. Perhaps this will change with the introduction of financial education to the national curriculum from this September – without it, any hope of financial equality between the genders could be lost.

The way young people bank now

The way young people bank now.

The way young people bank now

The UK is embracing digital banking according to a new report published by the BBA this week. ‘The way we bank now‘ found that millions of people are now using banking apps, and mobile banking is growing faster than internet banking was ten years ago. As well as this, it predicted the decline of bank branches. And, leafing through the report, I found this fascinating from the point of view of young people, given their misgivings about digital banking as little as two years ago.


Banking on Mobile

So what has changed and why is it surprising? Well, numerous studies have noted how conservative young people are. MRM’s 2013 Young Money – Generation Austerity report which surveyed 2,000 people aged between 18 and 60 on their attitudes to financial services found that young people were the most conservative of any age group.

And just 2 years ago, research by the CSFI think-tank, “Generation Y: the (modern) world of personal finance)” revealed that young people were wary about online or mobile banking – so much so that three quarters of those surveyed had never used mobile banking, believing security to be a major issue. In both reports, young people were particularly on banks keeping a physical presence on the high street – according to “Generation Y”, nearly all still visited their bank branch, if only to pay in cheques and get face-to-face advice.

But since then, an almost astonishing turn-around has happened, and recent research indicates that generation Y are warming to the idea. In May 2014, a report by the global consultancy Accenture found that young people were open to alternative financial services, with nearly four in 10 of those aged between 18 and 34 open to switching to a bank branch without any physical branches.

What are the reasons for such a shift in attitude? Well, first is the increase in smartphone usage – 70% of young people now own a smartphone, as well as the growing digitalisation of other areas of everyday life.

But, credit has to go to the banking industry (or at least the payments part of it), who have done a phenomenal amount of work in making digital banking more accessible. The Paym network, launched by the major banks earlier this year, and allows users to send payments via text message, saw a download every 7.5 seconds in its first month, according to the BBA’s research. Other payment apps have also been successful, such as Barclay’s Pingit. Young people’s acceptance of digital banking seems to have come full circle with the new Payfriendz payment app – which is aimed specifically at Generation Y.

Of course, there is still a way to go before physical bank branches are completely done away with, but as young people get more comfortable with digital banking, it will be interesting to see how it unfolds.

Pension death date should add certainty to saving

Pension death date should add certainty to saving.

Pension death date should add certainty to saving

News that pensioners could be given a ‘death estimate‘ – a rough guide to how long they are likely to live – to help them plan for retirement, has been dismissed by many this week as crass and misguided.

The estimate would take into account factors such as diet, lifestyle choices such as smoking and exercise, as well as longevity genes, wealth and geographical location (those in parts of Glasgow for instance, have the lowest life expectancy, while those in Harrow have the highest). While it is intended for those entering retirement, to help them best plan their saving and spending patterns, it could also benefit young people – particularly given that young people put off saving for a pension because they find it ‘confusing’.

A 2012 report by the CSFI think tank found that some young people believed that, while there was a degree of certainty in other savings – after all, it is easy to calculate how much you will need to save for a holiday, for example or a car or even a deposit for a house – where pensions were concerned, it became much more difficult, as there is no amount to save towards. In other words, when saving for most things, there is a fixed amount – or goal that you need to save – in mind, whereas, for pensions, it is a vague, open ended amount, and this vagueness discourages would-be savers.

Perhaps the proposed death date doesn’t go far enough – and young people should be encouraged from as early an age as possible to look at how long they might live, and accordingly, calculate from this how much they might need to save. Other studies of young people have indicated that they tend to wildly underestimate how much they think they will need to save in order to live comfortably in retirement. At least having some idea of how long they will live, and working out how much they would like to live on should give them a fixed number to save towards.

Either way, taking some of the uncertainty out of what, for many, is a distant point in the future, has to be a good thing for young people and retirement planning.

December 1: Modern Young Finance – weekly round-up

1. PlayMoolah’s growing up, launches WhyMoolah to teach young adults about finance

Techinasia; Terence Lee, November 28

Singapore-based financial literacy startup PlayMoolah has today launched a new mobile app – a cross between The Game of Life and Cashflow.

The game, called WhyMoolah, takes an avatar through different stages of life, making financial decisions about buying a house, daily expenses, and marriage. Along the way, players get tips on the hidden costs of big-ticket purchases, budget balancing, and financial management.

2. Children and financial education: MasterCard facilitates

The Guardian; Anna M Zanghi, November 28

Mastercard is involved in several programs which aim to promote the economic and social livelihood of children, by focusing on financial education and inclusion.

3. MP praises new scheme teaching children about money and personal financescheme teaching children about money and personal finance

The Westmoreland Gazette; November 29

Rory Stewart MP has called for local schools to get their pupils learning about money.

It is part of a charity’s new campaign to help improve the financial capability of young people.

Every primary and secondary school in the Penrith and the Border are has been sent ‘Get Money Smart’ posters and teaching materials.

4. Anil Agrawal Brings a Financial Education Campaign to Ottawa for Canada’s Financial Literacy Month and Beyond

PR Web; November 21

Anil Agrawal brings the National Financial Educators Council’s Campaign to Ottawa to help promote a Financial Literacy Month and overall financial wellness.

5. Pupils to get lesson in managing money

This is Wiltshire; Dominic Gilbert, November 30

Pupils are being encouraged to learn about money management from an early age as part of a new campaign.

Ahead of financial education being added to the National Curriculum in 2014, Swindon MPs have thrown their support behind the Get Money Smart project which will provide free resources to teachers.

6. MP backs campaign to get pupils learning about money

Fenland Citizen; November 27

Steve Barclay, MP for North East Cambridgeshire, has called on local schools to get their pupils talking and learning about money, as part of a new charity campaign to help improve financial capability amongst young people.

Every primary and secondary school in North East Cambridgeshire has been sent free Get Money Smart posters (see attached) and teaching materials by national charity pfeg (Personal Finance Education Group), which aims to get children talking about money in the classroom.

7. TD Financial Literacy Grant Fund awards $1.1 million in grants to 15 organizations

Wall Street Journal; November 27

Social and Enterprise Development Innovations (SEDI) announced that the TD Financial Literacy Grant Fund has awarded $1.1 million in grants to 15 community organizations to support financial literacy initiatives. The Fund supports organizations that deliver financial literacy programming to people living in low income and economically disadvantaged circumstances across the country.

The TD Financial Literacy Grant Fund, administered by SEDI, will support programs focused on financial education and support for women, people who are homeless, newcomers, at-risk youth, people in conflict with the law, and Aboriginal people in this round of contributions.

8. Report urges financial access for the youth

Business & Tech; Kennedy Kangethe, November 29

A civil society report indicates that the Kenyan youth need more access to affordable finance if they are to succeed as entrepreneurs.

Speaking while releasing the multi-sectoral interim report The Africa Youth Trust Executive Director Nahashon Gulali said access to finance is necessary but not sufficient to help youth entrepreneurs launch their own businesses.