'Invisibility' makes managing money hard for youth

Financial literacy experts say as society goes cashless, the young lose sight of value of money

Dr Nicky Reid (left) and Mrs Marilyn Holness from the University of Roehampton are behind the Money Doctors financial literacy support service that helps students across Britain manage their money.
Dr Nicky Reid (left) and Mrs Marilyn Holness from the University of Roehampton are behind the Money Doctors financial literacy support service that helps students across Britain manage their money. ST PHOTO: SERENE LUO

University education for British citizens used to be free - until the late 1990s when policies changed and students instead took loans to pay for tuition fees.

By 2013, students would graduate with some £45,000 (S$80,000) of debt, as they would have borrowed roughly £9,000 for tuition and £6,000 for room and board each year.

On top of that, said Mrs Marilyn Holness and Dr Nicky Reid, students were being handed cheques as part of their loans every few months - to pay for their rent and bills - but they had not been taught to manage their finances and often found themselves struggling to buy food before their next cheque was to arrive.

The two were behind the Money Doctors national support service for students in Britain, which at its peak reached 200,000 students in more than 100 universities there, teaching them life skills in managing their personal finances.

Both of them are at the University of Roehampton: Mrs Holness is director of student engagement, and Dr Reid is an educational developer at the learning and teaching department.

They were recently in Singapore to conduct workshops for parents and children as part of the RHB Financial Literacy Programme by RHB Bank.

The "invisibility of money to young people" is one main factor exacerbating the problems that young people have with money, they said.

Said Dr Reid: "For Marilyn and me, our parents worked and brought home pay packets - money in little brown envelopes. Money was spoken about in the household. As a child, you knew things had to be paid for (out of this packet). We knew money was finite.

"But now, kids sit in a trolley in the supermarket, and you take whatever you want and pay with a piece of plastic."

Added Mrs Holness: "Also, with ATMs, (as a child) you see people put a card in the wall and out comes money like magic."

They named things such as contactless card payments, or features like Apple Pay on the iPhone, as adding to that invisibility of money.

Singapore, for instance, wants to be a Smart Nation where technology has widespread use, including e-payments and banking transactions.

The downside is that "you don't make a tangible link when you tap that it (money) is coming out of your account", Dr Reid said.

This can lead to the inability to understand what money is worth and, eventually, bad financial habits.

Added Mrs Holness: "Even if you don't change your behaviour, be aware of it. Challenging attitudes towards money is the first step to changing behaviour. If you are not aware of it, you can't change."

For instance, property agent David Ng, 45, said his eldest son, 13, thought of car-hailing services like Grab as "cheap" and that "he could just keep pressing the button (on his cellphone to book a car)".

He had to explain to his son how the services worked, Mr Ng said, adding that "the sooner you get started with (financial education), the better".

Moreover, children are coming into contact with electronic money at an increasingly younger age, Mrs Holness said, which could exacerbate the problem.

Singapore's glitzy retail scene, with an abundance of shopping malls and brands, may create "a whole set of pressures" too, Mrs Holness said.

"How do you go around without spending money?" she said.

"There must be some people who must be walking around and seeing these malls, but knowing they don't have a lot of money.

"But you still have to walk through the mall and see others spending. It's difficult to be in a mall and not want things."

Ultimately, children are "not doing anything wrong" when they think that money is limitless, said Dr Reid, as they have not received proper or adequate education in learning to manage money.

"As parents, we always want to make things better for our children, like giving them everything.

"But as we become more affluent as a society, we are not giving them that life skill," she said.

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A version of this article appeared in the print edition of The Straits Times on August 21, 2017, with the headline 'Invisibility' makes managing money hard for youth. Subscribe