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Financial education and the poverty trap

amyCAs I drove through the City of London last week I listened to the news on the radio announcing 28% of adults and 40% of children in London are living in poverty (rising to over 50% in certain inner London boroughs). Though obviously aware of inequalities in the UK and across the capital it always comes as a shock to hear it put so starkly.  Sitting in traffic next to Tower Bridge I looked with growing a sense of irony at the gleaming confident skyscrapers of the City, proudly advertising London’s status as one of the wealthiest cities in the world.

I’d just driven through Tower Hamlets, with the highest child poverty levels out of all the UK’s local authorities. How can it be that within a mile of the City 52% of children live in poverty?  I understand that there needs to be a distribution of wealth and that it won’t always be even, but what I find hard to accept is how in 2013 half our inner London children live in poverty. Those are levels you associate with a third world country, not with our green and pleasant land and certainly not with rich, loud and proud London.

Poverty has a detrimental effect on every aspect of a child’s being; their health, education and life chances. At present there is a real political will to change the welfare system.  Regardless of the rights or wrongs of any approach to welfare it seems self-evident that poverty can only really be addressed long term through education. It’s the key to breaking the cycle of poverty.

6007978_sOne specific area which we are definitely coming up short is in financial education. Children from the poorest backgrounds are unlikely to get informed advice with money management at home.  It’s an area where schools really need to step up and fill the void.  Surely this vital discipline should form part of every school’s curriculum.  What a difference it could make for a child to be educated and inspired in the necessary life skills by a respected teacher.

I think there needs to be an introduction within schools to educate children on the fundamental principles and best practice of managing money and the risks associated with debt. This would benefit all children, not just the poorest in society. If we can tackle this at an early stage then maybe we could stop the cycle developing into adulthood. I know you can only educate people so far, but children need to be given a clearer direction so they can make better, more informed financial decisions that won’t damage their life chances, or those of their children.

No matter how much parents may love or care for their children if they don’t have the knowledge or confidence to inspire the next generation to take financial control then it’s something we must all take responsibility for.

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