Financial capability is the ability to manage money well – both day–to–day and through significant life events.
It is also about strength and confidence to make the most of your finances. Young savers are very closed to, what could be, detailed information in relation to what goes on behind an individual’s bank account.
Young savers can start small, by learning what they should save or spend lunch money they are given for school and how much. They should be advised, by parents/guardians or teachers, how to calculate what they need (necessities) and what they can do with the remaining income (clothing, gifts etc.). Being an adult and managing finances can be intimidating when you do not know where to start, then it becomes a real struggle if you find yourself with nothing left. Literacy is about calculating what is best for your personal life and costs that come with that.
Another way of increasing financial capability, is through the confidence gained when being taught. They should be shown how to trust their own decisions if they are not being assisted by others in that particular moment. This will contribute to independence when talking about money, understanding the future and troubles they my face alone. Also, using the right key words to show or learn more about any next steps that need to be taken, whether they are in a good or bad place.
Many blame this lack of literacy on their university years. Even though the rising costs of tuition fees are not their fault, they always face future debt because of authoritative decisions. This can be argued against by saying, these young people were not advised about these major changes, so even if they have some knowledge, it may not always be enough to know what was ahead, when dealing with costs. However, a significant change in curriculum will benefit young savers if they are given challenges in their school maths classes. This information can be added into their basic classes and assigned work. This would cater to questions they may need to answer themselves, further showing young savers that these details can be used in everyday living. Advising them, is a wise move forward knowing that can take away what they have learned is important at home or in reality.
And lastly, being shown where multiple sources of loans and debts come from and where to seek advice once they have left education. Whether it is their banks, a family member, or a tutor, they need to know who is best to ask and approach the situation with relevant details and key words, in a complex marketplace they might get lost in. Advise young savers to research important differences between loans, credit cards and interest that comes with any investments. This capability will improve once they can clarify how much they are borrowing, what & when they are paying back and the best way to do so.