The Silent Crisis: An Argument in Favour of Financial Literacy

The inevitable cigarette-butts of ExxonMobil’s Fawley refinery lie a mere three miles from my home. Despite their blot on the otherwise picturesque New Forest landscape, this particular behemoth is the monopoly employer of both aspiring tradesmen and graduates alike. The attraction of high wages, lucrative health plans, and the opportunity to travel abroad, has justifiably made Exxon Fawley the chosen workplace for dozens of fellow school leavers. The Waterside, where the plant resides, is a remarkable area where young labourers can thrive and prosper in comfortable lifestyles, defying Thatcher’s yesteryear assault of their industry.

The catch? Well, when you’re 21, employed and have disposable income quite literally bursting out of your ears, the objective is to spend it as quickly as possible. Indeed, the natural course of things for many seems to be: receive payslip, apply for credit card, lease new-spec BMW 3-series. The result? Sowing the seeds for a lifetime of debt. And by no means is this problem limited to my friends working at the power station. In fact, it is endemic to my entire social class and generation. Recent graduates, those who inherit lump-sums, young, small business owners, (and until I began studying economics at Bath, myself), simply have no idea about the fundamentals of finance in general. Credit ratings, tax efficiencies, interest rates, the stock market and even budgeting, are all foreign concepts to the majority. The statistics make for uncomfortable reading; 50% of the UK population are considered financially vulnerable, with 6 million believing they will remain in debt forever. As a result, many young workers in the SO postcode are living a modernised hand-to-mouth existence where hard work is too often swiftly lost to unsound financial decisions. 

But who can blame them? Financial education is neither innate nor taught in classrooms, and requires extensive research, patience and counsel. None of these are easily acquired without the costly service of an adviser. A common trope of the upper classes throughout history is the belief that some are just too irresponsible and frivolous to make wealth last. Echoes of the evil Loreilleux from Zola’s 1872 novel L’Assommoir are often recycled into argument when she says, “you should just see where you’ve landed yourselves by trying to impress people”. And in an environment of easy debt-financing and Instagram influencer-worship, where money is ironically spent to give the impression of it, the illness is obvious to spot. The cause, far less so.

It is convenient to believe that the working class are incompetent with such matters; yet the knowledge and mindset required for literacy is not typically accessible or legible to the layman. Most commonly a practice taught by parents to children, it perpetuates a vicious generational cycle when the parents have never been confident themselves. Indeed, one in six are not. The absence of this key life-skill from the school curriculum leads many young adults into a harsh and convoluted world of bills, taxes, and insurance. Banks, loan firms, and car dealerships, among others, offer an overwhelming selection of complex packages, each loaded with technical terms, using customers’ confusion as currency. Even those who learn to save are victims of pitiful interest rates and inflation. All of this is problematic.

So why change? Well, the benefits of such an education initiative are manifold for both the individual and society. When individuals make sounder financial decisions, their freedom increases. Financially literate people are, by virtue, less likely to turn to gambling or crime to make ends meet. They are also less likely to fall victim to fraud, scams, and poor investments. For the economy, new investors help to expand the market and workers are able to retire earlier, opening up the job market for the younger generation. A future UK, with its clued-up population of prudent money-managers, will in turn be a happier place to live, work, and retire. It is perhaps surprising then that governments have rarely addressed this issue.  

What is needed is a nation-wide initiative: a series of presentations and guides on the basic tenets of finance, from pension plans to bonds, credit ratings to ISAs, given out in schools, spreading previously uncommon knowledge and building the foundations of lasting prosperity amongst the population at a young age. To turn the disciplines of economics and finance into accessible, comprehensible concepts for the average person. Too often this valuable information has been out of reach from those who need it most. 

A financially literate society is a society where the people need not revolt to control their future. Let’s strive towards it.

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