Noble art of self-finance

30th January 2004 at 00:00
Watching Mr Blair being attacked by Middle England over tuition fees has been interesting for one rather oblique reason. On Newsnight, particularly, there was a cadre of parents weighing into him over the massively increased costs of funding university for their children. One, significantly, talked of having to "raise a second mortgage on our house" to avert the debt.

Other parents, neither particularly rich nor poor, took the same line. What is so interesting about it - I speak as a Middle England parent of students myself - is the underlying and ineradicable assumption that the finances of an 18 to 22-year-old remain unquestionably the business of their parents.

You don't get this assumption among the old working-classes. In that culture, the tradition is to keep them in food and clothes until they leave school, and after that they're on their own. You might lend them something, but a loan is a loan. My husband never had a penny off his parents after he finished A-levels, nor expected one. My university brothers and I, on the other hand, remained longer on the fiscal apron-strings: we got our former student grant topped up and it seemed natural.

This cultural gap, of course, helps to explain why going to university seems more daunting to the poorer student. And that is why, in defiance of its stated belief that all graduates will always earn masses of money irrespective of who their parents are, the Government has rather sheepishly decided to trim tuition fees and provide grants as well as loans for those whose parents are poor.

In theory, every graduate is equal. In real life, middle-class parents want to go on paying for (hence to some extent controlling) their children's lives for much longer.

The new deal is likely to blow all that apart - who the hell is going to fork out pound;40,000 a head to keep a houseful of students out of debt? So it is heartening to hear the Personal Finance Education Group rattling its fiscal chains and insisting that schoolchildren should learn, sooner rather than later, how money works.

Enthusiasm is slow to build: teachers are idealists and would rather discuss citizenship in terms of justice and tolerance than in terms of Independent Savings Accounts (ISA) and pensions.

In a recent survey in Surrey, a third of teachers said they had "low confidence" in their own knowledge of the sector anyway. But a majority of secondary schools in big cities were in favour of lessons on money and debt.

In the US, it is said to work. Children taught about "financial products" grow up to be savers. Children raised on the simple economics of pocket money for fun and food always on the table are more likely to end up as a lot of splurging Bridget Joneses.

Myself, I am always loth to encourage curriculum cramming, especially sordid stuff about front-loaded endowments and brokerage fees. But something has to happen in this new era. Eighteen comes along very fast, and that is now the age when even the children of the comfortably affluent should start thinking about loans and savings and debts and the implications of compound interest and the best way to shelter your nest egg , if any, from the taxman.

In short, we hovering, buzzing, helicopter-parents will have to hand over financial responsibility earlier. And it would help if we were not handing it over to a set of complete dingbats. I was a dingbat at 18: money came in from the adult world, rent and food went out, and anything left over was instantly spent on poetry books or suedette miniskirts. The idea of saving was downright weird.

In my first job I lived up to my income of pound;985 a year, and in the second and third I failed to understand what inflation was because my annual increments went up at the same speed anyway. I grasped just in time the need to put away money for Schedule D tax, but it didn't occur to me until I was 30 that it might be a good idea to buy a flat; and even then I got ripped off by an oily mortgage broker. I was 35 before I understood APR and ceased using my Access card as a blunt instrument.

Since then, by blundering around in Equitable Life, duff endowments, plummeting investments and rash house-moves, I have learnt the hard way what I could have been taught in three or four double periods at school.

The new generation of 18-year-olds must be brought up to speed. But maybe they should be taught personal finance outside school, in a clubby, cool, atmosphere.

Parents like me must stop our habit of organising the kids' car insurance, filling in Inland Revenue forms for them, or clucking over their overdraft and then paying it. Eighteen must at last become the real age of majority.


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