The British Government’s free debt advice service is struggling to cope with a growth of 28% in demand for its services. The increase, which occurred in the 12 months leading to July 2009, meant that 25% of its agencies either had to turn people away or have them waiting over a month for debt advice.
But how much does our personal debt crisis have to do with our own spending habits?
Well the statistics seem to show a close correlation between the availability of credit and the total amount of personal debt. As the access to credit has increased, the amount of debt we are in has grown as well and perhaps more worryingly, so too has the number of individuals being declared insolvent.
So there is no denying that personal credit availability and personal debt go hand in hand. But surely credit in itself would be no issue if we were able to manage our finances properly. Poor spending habits are thought to account for the majority of debt problems present among the UK population.
When we really lay the facts out, it’s not really a big surprise that our money management skills, as a nation, are so poor. Where and when do we get the chance to learn? While school equips us with reading, writing, Maths and Science skills, it doesn’t teach us how to handle credit, budget, keep an eye on our bank accounts or save! In other words, we leave school at 18 with unblemished credit records (because we have previously never had credit) and are expected to learn as we go along. When you’re learning ‘on the job’ with something as crucial as personal finance, things can go wrong. The Government has recently taken steps to eradicate this issue, however, with the announcement that money management classes will become compulsory as part of the National Curriculum, for children as young as five.
More recently, the Government has announced that money management lessons are to become a formal part of the National Curriculum, meaning that children as young as five years old will be learning the skills of money management at school. Perhaps this will means that twenty years from now we see a notable improvement in personal debt levels – we will see!
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