Savings clubs for young kids
How to get the nation to save, as well as borrow, has been a conundrum no one has yet managed to solve. Governments have done their bit to encourage the savings habit – sometimes well, occasionally ineptly - but despite the advent of tax-friendly Isas and Jisas and pension auto-enrolment we still don't save enough.
The industry has had a go by giving us low-cost investment plans but invariably its greed has got in the way, leading to bouts of endemic mis-selling and widespread consumer distrust. One step forward, two back.
As a result, we remain first and foremost a nation of spenders.Yet it doesn't mean that we should give up on promoting savings as a virtue and urging people to wear the savings mantle. Far from it. We need to continue to search for solutions.
Recently, I had the privilege to attend a conference on savings organised by the Tax Incentivised Savings Association (Tisa), a somewhat understated organisation whose purpose in life is to spread the savings/investment gospel.
Come the New Year,Tisa will unveil a seven-point plan under its 'savings and investments project', outlining what it thinks needs to be done to stimulate a savings culture. It's a plan I look forward to seeing.
Back to the conference. Entitled 'Getting the UK saving more', it included opinions from an array of academics, politicians, financial services experts and even behavioural scientists. It was all very fascinating and also stimulating but what came through loud and clear
was that the savings conundrum will not be solved overnight.
Governments can come up with yet more savings tax breaks,Tisa can publish its recommendations and financial companies can design simpler consumer-friendly products, yet if we really want to inculcate the savings habit into the nation's soul, we need to go back to basics: financial education, financial education, financial education.
What we have to do is to get our children to realise the importance of savings – and to recognise the sin of overspending.That means financial education in the schoolroom.
The government has already acknowledged the importance of teaching money matters at school. From September this year, personal budgeting and money management have been embraced within the new citizenship and maths curriculum for secondary schools – and Moneywise has celebrated this with its Personal Finance Teacher of the Year competition.
The hope is that children will leave school a little wiser and be in a position to make informed and sound, financial decisions. Welcome though this is, it's only part of the financial education jigsaw. Academic research indicates that the younger you get children interested in money matters, the better prepared they are to tackle the financial world when they become adults. In other words, why wait for secondary school when you can start introducing financial topics in primary school?
Thankfully, the Archbishop of Canterbury has come to the rescue. Angered by the growth of the payday lending industry – and embarrassed by the Church of England's investment in one of its high-profile players, Wonga (a relationship now unwound) – he is backing the launch of savings clubs in primary schools.
Developed by the Archbishop's task force on responsible credit and savings, the idea is to encourage kids to save small amounts through a club run from the classroom but administered by a credit union. Children will participate in the running of the clubs, parents will be invited to save through them and teachers will be encouraged to get involved in the education process.
Archbishop Justin Welby believes these savings clubs should help children develop positive attitudes towards money and saving. Provided the pilot clubs prove to be a winner, they could become a permanent feature across the 4,500 Church of England primary and middle schools.
The creation of the Archbishop's savings clubs won't fill in the UK's chronic savings gap in my lifetime but they're a giant step forward. I pray they will be a success.
Jeff Prestridge is the personal finance editor of the Mail on Sunday. Email him at firstname.lastname@example.org
The practice of a dishonest salesperson misrepresenting or misleading an investor about the characteristics of a product or service. For example, selling a person with no dependants a whole-of-life policy. There have been notable mis-selling scandals in the past, including endowment policies tied to mortgages, employees persuaded to leave final salary pensions in favour of money purchase pensions (which paid large commissions to salespeople) and payment protection insurance. There is no legal definition of mis-selling; rather the Financial Services Authority (FSA) issues clarifying guidelines and hopes companies comply with them.