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How to handle finances

Leading enterprise education charity, Young Enterprise, commissioned the poll of 1000 young people and found that they don’t feel they have the right information to be able to handle their finances when they leave school. This sense of uncertainty is greatest amongst 17 year olds with 70% of this age group lacking in confidence and 72% saying they don’t know where to turn for help, despite being old enough to walk into any bank and set up their own account. Overall, girls are the least confident, with 66% saying they aren’t prepared to manage their finances, compared to 50% of male respondents.

This lack of financial awareness is reflected in young people’s general misunderstanding of the cost of living. Respondents were asked to guess the cost of various items, displaying a startling lack of awareness in such areas.
Key research findings here include:
• The average cost of a loaf of bread was thought to be £4.31
• Half a dozen eggs were believed to cost as much as £4.41, with some respondents guessing as low as 10p
• The average cost given for a house was £1.2 million - £978,000 more than the average of £222,077, specified by Rightmove. The highest answer given for the cost of the average house reached a ridiculous £350 million

However, it appears that young people do keep themselves up to date with the price of popular technology, indicating an imbalance of financial awareness between essential and luxury items. Awareness around the cost of IPods was much higher, with the average estimated cost of an IPod Nano thought to be £105 – only £2 less than the standard retail price.

To help ensure that young people have the opportunity to develop the skills and confidence to understand their own finances and the economy in general, Young Enterprise has developed the Personal Economics Programme. Volunteers from local business come into schools and share firsthand experience with pupils about managing their own finances, bringing the real-life aspect of the programme closer to the students. The programme aims to help young people make plans for the future, and build confidence, knowledge and skills in personal finance through games, activities and role-play exercises.

Deborah Meaden, business woman and Young Enterprise spokeswoman, said:
“The results of this survey have shown that 76% of all young people feel scared by what they hear in the news about the current economic situation. At a time when terms such as credit crunch and recession are in constant use, I believe it is vitally important that the financial concerns of our young people are taken seriously. The Young Enterprise Personal Economics programme is specifically designed to help students understand terms that are used in the news every day, treating financial education with the sensitivity it requires, whilst ensuring young people understand the importance of managing their money now. These young people are the future of our country and a programme that supports them in preparing for this is something I am delighted to support.”

Andrew Grimley, Development and Communications Director at Young Enterprise said:
“This overwhelming uncertainty felt among young people when it comes to understanding and managing their personal finances is something we want to address with the Personal Economics programme. The “Learning by Doing” approach that provides the basis of all our programmes means that students gain a hands-on, practical introduction to personal finance, credit and debit, savings and investments and budgeting. Students are encouraged to appreciate their current and future role in society, creating a generation of young people who are clued up and ready to face adult life and the world of work.”

The Young Enterprise Personal Economics programme challenges pupils with a number of credit and debt activities, spending dilemmas and example bank statements. The use of a ‘Life map’ enables them to look at how they should be planning for the future – covering everything from choosing whether they go into higher education or straight into work, to how many children they think they might like to have. It covers cost implications involved in each decision and how to differentiate between necessities like food and clothing, and luxuries like IPods and concert tickets.

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Author: Elise Rabone