Getting Wise about Money with ‘The Banks’

For most people, financial wellbeing is not about amassing wealth – their goal is achieving a level of financial stability that will allow them to face one or two road bumps along the way. Without the proper tools or knowledge, it’s easy to make the wrong decision and get into financial trouble.

Have you ever needed to make a difficult choice on what to spend your well-earned funds?  Should you use it to buy those designer shoes you’ve had your eye on? Save it for that dream holiday you’ve always wanted to go on? Or should you put it away for a rainy day? Chances are you’ve probably broken out into a cold sweat at some point because of a financial decision you’ve had to make.

Most of us think we know how to manage our money, but when it comes to the crunch we often quickly realise that making financial decisions requires quite a bit of confidence – and very often we can doubt what we know (or don’t know, as the case may be).  Add to this the fact that the average person doesn’t have limitless funds and savings to spend on everything they need or want and the decision becomes even more difficult.

Having a poor understanding of financial matters can have a material impact not only on an individual’s life choices, but also on communities in general. One only has to look at the financial crisis of 2008 to see the financial impact on an entire economy and the far-reaching effects across the globe that this had – all of which stemmed from a lack of understanding of mortgage products and the impact of subsequent defaults.

In addition to low levels of financial knowledge, it appears that, increasingly, financial decision-making is getting more taxing for consumers.  There are multiple reasons for this but, in general, it can basically be boiled down to three main causes:

  1. With the responsibility for retirement planning shifting from the state to individuals, consumers are having to assume more of the financial decisions that impact their later life at an early stage of their career. Life spans are now longer so individuals require more retirement savings than previous generations.
  2. Investment options are increasingly becoming more complex and sophisticated with consumers facing different products, rates, and terms. Making difficult financial decisions can then impact a person’s ability to buy a home, get married or start a family.
  3. The environment has changed and continues to evolve rapidly. We have moved from being a cash-based society to one where online shopping, virtual currencies, and contactless payments are king.  This has created a credit-reliant culture where debt can be accumulated quickly, disregarding the repercussions and impact this can have for years to come.

What this means is that individuals are having to make more informed decisions about their finances and the importance of financial literacy in this process should not be underestimated.

Studies carried out in recent years by the Organisation for Economic Co-operation and Development (OECD) show that whilst in many countries women tend to have lower financial knowledge than men, they are better at keeping track of their finances but tend to plan and save less for retirement. First time and lower income earners, widows, and early school leavers are also less confident in their financial knowledge and skills. In the UK, specifically, 96% of teenagers worry about money on a daily basis and 52% are in debt by the age of 17, with young adults having amongst the lowest level of financial literacy.

Two of the GFSC’s regulatory objectives focus on the promotion of public awareness and the protection of consumers. An element of consumer protection can be achieved by ensuring that the public has a better understanding of key financial concepts, better positioning them to recognise and evaluate the choices available – in a nutshell, enabling them to make better, more informed decisions.

In line with the OECD, we believe that: ‘financial education can make a difference. It can empower and equip young people with the knowledge skills and confidence to take charge of their lives and build a more secure future for themselves and their families.’

Our Moneywise consumer education programme, which was launched in October 2017, focuses specifically on increasing financial literacy; aiming to raise awareness and improve understanding of financial matters at all stages of life.

Moneywise was kicked off through a programme of delivery in all local schools via age-specific interactive sessions and the dissemination of workbooks and information leaflets. Through the use of virtual cartoon characters – The Banks – who typify the average family, financial concepts and ideas are introduced and discussed.  These include the four basic concepts of: saving, spending, investing and donating, whilst also delving into factors such as needs and wants, supply versus demand and budgeting more generally.  In addition, The Banks also introduce and explain different financial products and services which include everything from savings accounts and mortgages, to credit and prepaid cards, as well as virtual currencies and different types of investments.

Moneywise will continue during 2018 and beyond – so expect to see the Banks family somewhere in the coming months – perhaps either in town, when you pop into your bank or online in the not too distant future.