Bankrupt graduates – W.O.T.

We are  a nation in debt. Jointly and severally. As a country we have lived beyond our means, individually we have spent more than we have earned.

The problem is not universal and many individuals have managed their finances well, but collectively we have not behaved well.

I make this as a moral judgement, morality being the study of the ways of the people (mores). Living within your means means being self-sufficient. We do not want our children to have to pay our bills any more than we want to pay our parents bills.

I pay a lot of bills for my family and I am intent that come their reaching majority, my and other children will be self-sufficient, or – if in debt – have proper debt management plans.

It is difficult for insolvent parents to preach solvency to their offspring. Since the majority of parents are part of the debt problem , rather than solution, there is a consensus that financial education, while it may begin at home, needs to be reinforced in schools colleges and the workplace.

And it’s not happening.

The bank of Mum and Dad/ credit cards ,student loans and even loan sharks are the defaults for our kids.

Budgeting, economising , saving and working seem to be low on the agenda.

Which is why I am keen when I see people like my friend Viv Friedgut show some leadership. Vivi displays good habits, teaches good habits and she does her work in schools and colleges.

I’m keen to get her work with companies and talking with her, I can see where she can fit in.

Here is an insight that struck me this morning.

 I have always assumed that schools and universities taught us life skills and that we entered the workplace prepared for a working life.

I am thinking this assumption’s wrong. University does not  necessarily prepare people for good adult habits. In fact it teaches a whole load of things that need to be unlearned – not least the idea that debt is normal, available and its repayment at the creditors discretion. Those who do not go to University are increasingly a minority but they seem to have by-passed these negative habits and , in my limited experience, considerably more grounded about money than their graduate colleagues.

Every year my firm takes on graduate trainees as do the vast majority of professional practices and other organisations for whom academic qualifications are important.

I suspect that the graduate recruitment process makes the same (wrongful) assumption that I have made, that these graduates are ready for work. I don’t think they are. I think that many are financially incompetent and so dysfunctional that they typically underperform because of money worries.

I don’t, as an employer, like the idea of paying for my graduates to get a grounding in finance (and to be fair actuarial students are a little more sensible than the norm). Nevertheless, I reckon it may be better for us to spend some money on educating them in some financial life skills as part of their induction into work, than assume that they will sort things out for themselves.

I’d rather that than see them swap their wages for Saturday morning hangovers and accumulate debt rather than save for their future.

Bankrupt graduates are a waste of time.

About henry tapper

Founder of the Pension PlayPen,, partner of Stella, father of Olly . I am the Pension Plowman
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1 Response to Bankrupt graduates – W.O.T.

  1. James Souttar says:

    Henry, if it is “difficult for insolvent parents to preach solvency to their offspring”, how much more difficult is it for insolvent banks to preach solvency to their customers, or insolvent governments to preach solvency to their citizens? The problem with kitchen table economics is that it extrapolates from the microcosm to the macrocosm. Yet what has happened over the last twenty years is that the macrocosm increasingly didn’t bear any relationship to old-fashioned notions of ‘balancing your chequebook’. For instance, I clearly remember a client at (what was then) Abbey National telling me that savings and loans were considered ‘old hat’ in the Bank – and where all the action was was in Treasury (who were making vastly greater profits trading in all kinds of obscure financial instruments). This was the mid nineties. Over time, I saw the same approach affecting all kinds of other organizations, too – even charities (after all, why put a lot of effort into fundraising, when the financial director could get a much better return just by sinking the reserves into Landsbanki?) And of course this cascaded right down to the kitchen table – literally, because when the absurd appreciation in the value of your home was exceeding the performance of your pension many times over, why bother with the pension? Why not take out a second mortgage, and buy to let?

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