Laying the Foundations with Financial Education
If the latest survey of household finances from the Bank of England is anything to go by, there will be many people hoping that the New Year will bring with it a rush of new house building, for it seems that is the only way they are ever likely to be able to afford their own home.
In its annual report, the Bank stated that nearly half of all the families surveyed without a home of their own thought that they never would be in a position to buy. Many of those respondents are the sort of middle class families that, traditionally, would have been pretty much guaranteed to own their own homes unless they actively chose another path.
The lack of available properties has distorted that market to such an extent that prices are being held at levels far out of reach of the average aspiring house buyer. Another recent report, this time from Ernst & Young, states that house prices are predicted to keep rising above the rate of wage increases across two-thirds of the UK in 2020, which is only going to add fuel to this particular fire.
It is clear that families and young people wanting to buy their own home are going to have their work cut out for them, particularly in the South East where house prices are expected to grow even faster than the rest of the country. Trying to save for a deposit and associated buying fees is going to prove exceedingly difficult for anyone who is already shelling out a significant proportion of their income on rental costs.
Managing such a tricky financial situation would be quite a task for even the most erudite of home economists but for most people, who will never have been taught anything like this at school, it will seem an impossible mission. That’s why it’s so important that we start improving the knowledge of the current generation of school pupils, because it doesn’t look matters are going to improve any time soon.
Cradle-to-grave approach to property
Better financial understanding, increased awareness of the different opportunities offered by renting or buying, greater knowledge of how to budget and accrue the funds needed for a deposit – these are all areas in which we should be helping young people to develop their skills. We need a cradle-to-grave approach to property, inter-linked with finance and employment, so that people are capable of managing their individual circumstances to the best of their abilities, no matter what stage of life they are at.
Failure to do so will put more pressure on young people already struggling to find employment, manage student debts and deal with the other, unexpected obstacles life throws at them. If we don’t help better prepare them for life’s challenges, then far too many will be left out in the cold.