Financial Illiteracy: a Major Problem in the UK

A report recently published by Credit Action, a nationalaccumulate significant debts in the near future.
money education charity, shows that by the end ofHowever, despite the concern - 30% of parents do
February 2007, personal debt in the UK reachednot discuss debt or credit at home with their children.
£1,310 billion - up by 10.5% since February 2006. InNearly, 22% believes that their children are not
total, there is £116 billion more personal debt nowinterested in financial matters and 48% do not want to
than a year ago."appear like a nag".
Another financial report reveals that consumer debt isIndustry experts - including charitable organisations -
increasing at a rate of £318 million per day andhave started urging people to be more open about
that roughly 300 people in the UK have to seek andebt problems. Derek Oakley, the insolvency director
IVA or declare themselves bankrupt every single day.at Debt Free Direct, said that the only way to deal with
According to Citizens Advice, a registered charity forfinancial ignorance is to talk and learn about the facts.
legal and financial advice, people are becomingAccording to Martin Lewis, the creator of - "Sadly in
increasingly worried about their personal debt problemsthe UK, money is often a taboo subject, which adds to
and that it deals with 5,300 debt problems each day.the huge problem of financial illiteracy in the UK. It's time
A sample survey carried out by the Department ofall parents and students started talking, considering their
Education and Skills indicates that debt problems will becash, understanding how the system actually works
more severe for the current generation of teenagers,and discussing how to live within a budget… Do
as they are 'disturbingly financially illiterate'.that and there is no one who should be put off
Their report shows that 40% of the young generationentering higher education because of worries about
in the UK is not aware of the real meaning of APRstudent debt."
and that 25% of the 16 to 21 years old believe thatExpressing his concern on the issue of teenage debt -
store cards offer better value than credit cards.Bill Rammell, the minister for higher education, recently
The report also shows that 83% of parents aresaid that besides common societal topics, parents
apprehensive about their children's understanding ofmust discuss money matters too.
financial matters and feel that their children will