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“Neither a borrower nor a lender…”

I thought I was well prepared when I came back to the UK. I knew what to expect.

I knew that our income would be lower, costs higher and the potential for saving reduced. I knew that we would have to tighten our belts, save our pennies, cut down on the luxuries: I was ready to downsize and accept a lower quality of life. No rose-tinted specs; no high expectations for me.

But I still ended up being surprised. I was surprised – not because the cost of living was lower than expected (it was higher), or the wages higher/taxes lower (fat chance). I was surprised because, despite all this, so many people seem to have (or spend) so much in this country – I’m not talking about clothes or everyday basics, but big things, like holidays, houses, cars and home extensions.

The very first thing I noticed when I settled back home was the number of people in my local area with flash cars. I don’t live somewhere like Dulwich, with its grand houses and well-heeled residents. I live in an ordinary, non-bijou town in Hampshire, with its fair share of “deprived” zones. And yet, there are a startling number of recent model BMWs, Mercedes, Porsches and 4x4s around, many of which have personalised number plates (for which there seems to be a bit of a craze) and many of which stand outside exceedingly ordinary houses – you even get them in the “deprived” areas, for heaven’s sake.

The next thing I became aware of was how many of my children’s schoolmates nip off to Florida or Barbados every year (oh yes, my kids were keen to point that one out). I know that you can get cheapish deals sometimes, but nevertheless, those holidays still cost a lot of money.

And as for housing: the prices round here are astronomical. Yet people I know are still managing to upgrade from three-bed to four (about a £100,000 hike); or else they are investing in an extension costing up to £80,000.

I don’t understand. My husband doesn’t get a bad wage, and OK, I’m still not earning yet, but we live in a 2.5-bed house, run an old Citroën diesel estate and go camping in the UK for holidays.

So how does everyone else do it? Do all these people have a larger income than us? Are they just cannier at saving? Do they merely have differing spending priorities? Are their general expenses lower? Or, as I suspect, do some of them manage to get what they have by borrowing on credit?

Getting a loan, credit card or mortgage is pretty easy in this country. And it’s great. It means that people can buy things they might never be able to afford otherwise; who could ever buy a house without borrowing the money (unless you had a larger one to sell of course)? Yes, it’s marvellous – “I want, can get”.

But I’m not convinced everyone understands just how it all works.

I’m sure most of us don’t bother to the read the weeny weeny small print on these credit agreements (it’s too much of a struggle – even with my new reading glasses on). And even if we can read it, not all of us understand what it says. The terminology is so alien (I’m ashamed to say I don’t really know what APR stands for) and the sentences are so oddly phrased in legalese as to require either great effort, or specialist training.

No, I think many of us are blinded by the prospect of getting something without actually having to pay for it up front. Of course, there’s nothing wrong with making the odd large purchase in this way. But the problem comes when people start to rely on credit too much.

It’s well documented that some people in this country have managed to rack-up debts so huge they may never be able to pay them back. On the one hand, I envy their gall – if I had the guts to do the same, we could be living in a larger house with a flash car and fancy overseas holidays every year. On the other, I know that my general aversion to debt/owing money would never allow me to do it.

I partly blame the big credit/loan corporations. The way they phrase their promotions, it’s made to sound as if you can get stuff for free; and I have a feeling that there are some people who actually believe that they can.

A friend of mine recently got a new three-piece suite. I was impressed she could afford this as a single mum, but she explained: “My credit limit went up, so I thought, great, why not? I can spend more.” Er…yes, but you still have to actually pay it back…and with interest.

Don’t get me wrong; my friend is a bright woman, and I’m sure she realises she still has to pay the money back – but what about those people with the massive debts? Do they over-borrow thinking they will eventually pay everything off? Do they genuinely not realise what they are getting into? Or do they think that it will all just go away?

The problem is, we’re never really taught how to deal with our finances. Granted, some people have very savvy parents who manage to pass on their sage financial wisdom. And some choose to study accountancy/business studies or some such and they have the advantage of knowing just how to maximise their income. I, however, managed to enter the world of adulthood being fairly financially ignorant.

I don’t understand financial jargon and, to be frank, I’ve never really tried to. As soon as I come across the terms “fiscal”, “base rate” or “standard variable” my brain takes voluntary leave and decides it’s happier wandering around somewhere else. I just can’t apply myself to it. And I’m sure I’m not alone here.

As I was idly chatting about this topic with a friend, she came up with a brilliant idea: we ought to teach children these things at school.

Kids would be so much better prepared for work and entering the adult world if they knew about savings, tax, pensions, mortgages and what it means to take out a loan/borrow on a credit card. So instead of “general studies” or as part of that new subject PHSE (I’m still not sure what it stands for), they ought to learn about money matters.

While they’re at it, they could teach children about entitlements and benefits, renting/buying a house, choosing the best gas supplier/insurance company and all the other things that nobody taught you about being a grown-up.

One thing’s for sure, if the schools don’t teach them, they’ll end up like me, bumbling through my adult responsibilities, never really maximising what I’ve got, and following advice without really understanding it. Or worse, they could end up with a massive credit card bill.

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