Press 3 to increase your debt

online-finance-debtThe massive technological changes that have made it possible to pay bills, manage a bank account and transfer funds online, have not had any impact on our underlying knowledge of how to manage our finances.

Indeed, it is probable that the ease with which these simple things can now be done on any smart phone or tablet, means that most people feel even further removed from any pressing need to think about finance, and are now less familiar than their parents’ generation about the realities of how money works.

All of those who responded liked the idea of more online transactions being faster and more convenient!

According to a 2015 survey of American households – in a country were advances in banking accessibility are even greater than in the UK:

80% of the respondents could not pass a simple test about how to make retirement savings last.

24% of households did not pay their bills on time and seemed to have no idea about how they will suffer in the longer run through racking up added interest charges ,as well as getting a poor credit score.

It is dangerous to allow people to do things more easily with fewer immediate consequences, especially when all the evidence shows that they do not understand the fundamentals of what they are doing, or comprehend the full consequences of their actions.

Online Interest

This state of affairs is rapidly becoming the norm over here. Online financial transactions suit all the banks and finance companies. They reduce their costs – online does not require branches, or staff on duty – and they also distance us from them, so that when things go wrong it is much harder to sort them out without someone to talk to over the counter in a branch.

For vulnerable people and people who really do not understand the building blocks of best practice personal financial management, the online world is a place in which they can go wrong very quickly, and then slowly suffer painful and potentially life-long problems of debt, expensive interest charges and a poor credit history.

Every young adult must be given the training and education necessary to ensure they become sensible and prudent financial managers, long before they start to undertake any on line transactions.

When we play Keep the Cash! in schools up and down the country we start by educating students, through an interactive teaching method, all about the fundamentals of credit, interest, cash flow management and the perils of unmanageable or unplanned debt.

The way to build a generation of financially literate young adults is not to allow them near a mobile phone and a bank account, until they have gone through a planned programme of essential education. To do it the other way around, is a recipe for debt and disaster.