Will education stop the debt problem?

There have been dozens of reports and discussions in the previous year on the benefits of financial education, and whether it is worth the cost. The idea of publicly available financial education does have its merits at first glance.  If conducted properly a government education plan can have a substantial impact on the way the next generation spends and builds wealth.

The idea is good, as good as the anti smoking campaigns. Unfortunately, as long as there are cigarettes there will be children who smoke. As long as banks are allowed to give teens a credit card, without their parent’s approval.  Regulation and legislature can make it more difficult for financial institutions to target people with spending problems, including teens, but it will not eliminate the problem.

Another side of the argument states that people’s lifestyle expectations are directly related to television and movies.  These form the ‘intangible’ element that builds the debt mountain.  People’s need to live the good life, and have fun, the need to be entertained and amused must be addressed if education is expected to work.

But, the biggest debate going is whether the government should spend money educating youth while they are still in school, or whether they should educate their parents. The government has started a debt hotline to help people and there are charity organizations.

The problem is that most people are not aware that there is help out there until they are so far in debt that they risk losing everything. 

Education in theory is a good thing.  There is a theory that poverty is a condition of the mind, not the pocket book.  You can give a poor person an extra ₤20 000 a year and they will continue to run out of money, build debts, and run the risk of insolvency.  Some factors that continual the cycle of poverty include the need to be entertained and own things. 

Look at lottery winners.  A television new show in Canada tracked people who won more than $1 000 000.00.  They wanted to create a show that revealed the changes the money made in these people’s lives five years later. Unfortunately, they did not find anyone who had improved their lifestyle.  The only ones who were doing well five years later had been doing well before they won the money.

This is also called the ‘welfare mentality’ in the USA.  The belief that poverty is a state of mind – not the wallet.

Of course, this doesn’t explain why a rich person’s child becomes a shopaholic who  spends two or three generations accumulation of wealth within a few short years.  Which brings in another train of thought.

Is poverty a social disease?  Do we let society, peer pressure, drive us into debt. If this is the problem, then an ad campaign will be more effective than an education program.  The debt problem would go away faster if it was treated the same way as the problem of smoking among today’s youth.

Many economists are not concerned about the national problem at all.  The UK’s debt economy has worked for a couple decades.  The country has survived recessions that hit other countries. The country has avoided a housing market crash.  In fact, the government is desperately increasing interest rates in an attempt to slow spending.

Fundamentally, most of us do not worry about the population in general. We only want to know what can improve our own situation.  Individuals always improve their chances of survival through education.  It is a little primal thinking of reducing debt and building wealth in terms of survival, but it a valid comparison.

When we bring the discussion home, to our own situation, we are forced to ask ourselves why we are not taking advantage of the current educational opportunities.  The answers will vary, but in most cases they will fall into two categories, refusal or denial.

Unchecked, societies problems always return to become a personal problem.  Take the current debt-denial situation.  Families are being torn apart by debts that reach as much a ₤40 000 before their spouses realize that there is a problem. 

There are a few dozen solutions for debt on the table, but until the foundation is addressed there is little chance of any making a substantial change to society.  People need to start realizing that owning a home, dressing nice, and living the ‘good’ life are not human rights, but the fast track to bankruptcy course.

It is not a person’s right to own a home.  It is a person’s right to build wealth and live comfortable, secure, life.  That may mean skipping designer clothing, and the high interest associated with store cards.

The government is on the right track when it comes to implementing educational programs to handle debt, but it is only the start.  They must either teach us how to manage our own debt, and then remove their grip on the economy, or they need to take the financial institutions to court for endangering minors, piracy, and preying on societies most impoverished.