The modern UK has a nasty debt habit. While many of the grandparent generation follow the 'neither a borrower nor lender be' mantra, some of today's parents are debt–bingers relying on plastic as a crutch to fuel unsustainable lifestyles.
We're left with an unnatural juxtaposition; borrowing has lost its stigma. After all, we need it to buy houses or get educated yet we're a debt–illiterate nation.
And while we need to accept that debt used correctly is a powerful enabler, too many still get burnt. So the challenge is what and how we teach our children to stop passing on bad messages and break the cycle of debt.
It mustn't become an exercise in bank branding
For too long, the only financial educators in some schools have been banks, with their 'school bank of Natwest' and the like – a sceptic would say this is touting for trade, disguised as generosity.
It was once calculated people are more likely to get divorced than change bank account. So if banks bribe 10-year-olds to join with a cheap plastic toy, they may still have them as customers half a century – and thousands of pounds in profit – later.
Not every bank aim is Machiavellian, but if we’re going to invite banks into schools, let's ask ten in to compete for business and show pupils how to assess their offers. This may just help teach that a bank's prime job is to sell us products, not help.
Check out the sweeties by the till
Bank accounts and how income tax works isn't enough; we need to set our children up as effective empowered consumers. To start wee ones off correctly, they need to be told the modern world is all about competition and marketing. For that, there's nowhere better than those cathedrals of consumerism we call supermarkets.
When there with under eights, ask them: "Why do you think there are sweeties by the till?" And when those cherubic faces look up, explain that it's because a supermarket's job is to make money, so they put the sweeties there so you won't forget to ask mummy or daddy for them. That way, they might make a little bit more money.
It's about training us to buy better
Companies spend billions of pounds a year on marketing, advertising and teaching their staff to sell, so this is a wonderful opportunity for schools to engage in what I call buyer's training.
That can pay real dividends – a couple of years ago, in an experiment filmed for ITV1's Tonight programme, I was parachuted into a school to see what I could teach a dozen 15–year–olds in a 'Teen Cash Class'.
The results were astonishing. After just one day, the kids went home and saved their parents a combined £6,000. That leads to two obvious conclusions: first, there's a need for financial education in schools; and second, there's a need for financial education of adults too. Afterall, if their children can save them so much, not everything's right.
The class worked so well, I was asked to convert the lesson plans into a free guide which I'm pleased to say has now been downloaded by teens, parents and teachers nearly half a million times.
The Teen Cash Class
Being money–savvy needs more than just a classroom, there are three vital Teen Cash Class lessons to teach your kids.
Lesson 1: A company's job is to make money
There's nothing more important than understanding companies aren't there to help, give advice or be your friend; they're there to make money.
It doesn't make them bad, it's just something that needs to be understood. So when you see sexy adverts or marketing trying to target your spending impulses, remember someone's spent serious cash targeting your desires to loosen your pockets – even when it isn't necessarily the right thing to do.
That's the reason Dragons' Den isn't called Fluffy Bunnies' Den: their job is'’t to help, it's about profit.
So don't let them get one up on you – every time you buy something, step back and ask: "Do I need it, will I use it, have I checked if it's available cheaper elsewhere?" If not, keep the cash in your pockets.
Lesson 2: Debt isn't bad, bad debt is bad
Grandparents can be very dangerous. If they tell you never to borrow, don't listen! If you want to buy a house or go to university, the system is designed so you’ll need to borrow, unless you've super–rich parents.
What's crucial isn't whether you borrow. but how. Massive differences between different types of debt mean getting it wrong can cost £1,000s. And that's the problem with the 'don’t ever borrow, little Johnny' attitude because if it's all bad and you need debt, you mightn't focus on the right type.
Many students leave university with well over £10,000 of borrowing. Each year, when I'm interviewed about the new student debt figures, I answer: "It's not how much, but how much of each type that counts."
Good debt. Official student loans are the cheapest long–term debt you’ll ever get and only need repaying if you earn over £15,000. You curently pay 9% of anything earned above that, so the more you earn, the more you repay.
OK debt. Banks try and buy your custom with interest–free student overdrafts. Yet if you're still in debt when you graduate, the rate shoots up to 18%. Use this for short–term cash shortages if necessary, but not long–term borrowing.
Bad debt. Get a credit card, loan or hire purchase as a student and it's a nightmare. High rates mean you'll owe more and more. When you're a student, it's tough to repay. In a nutshell, avoid.
Far too many students who've been told "don’t borrow!" find they end up with the worst debts, as they don't delineate between different types.
Lesson 3: Loyalty doesn't pay
While it's an important quality with friends, family, girlfriends and boyfriends; when it comes to dealing with mobile phone companies, brands, insurers, banks, shops and more, loyalty is for losers.
Most of the best deals are for new customers. If you look around, they need to fight to win your business which tends to mean more money in your pocket.
For example, car insurers kick and spit to win new business, tempting people in with ultra–hot deals. Yet when it comes to renewal, your price goes up as you're paying for the newbies' discounts. Shockingly, if you apply to your existing company as a new customer with identical details, you'll usually be charged much less.
See the full Teen Cash Class guide for more.