'Don’t just sign the paper – read the terms': teenagers learn financial lessons

https://www.theguardian.com/society/2018/dec/16/vulnerable-teenagers-helping-hand-finances

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When Tina Peterson (not her real name) reached adulthood, the reality of life hit her quickly and hard. “When I was 18 my dad was instantly ‘jobcentre, get on it now’. Then he stopped paying for my mobile and certain things that I needed, to teach me,” said the young woman from Newham in London. She moved out soon after. “I live on my own [and] if I don’t pay rent in my hostel I’m going to get kicked out and nobody will help me.”

For young people in families on low incomes, managing finances can be unforgiving. For vulnerable teenagers, being able to deal with what little money they have is even more important, as they could end up on the street if rent payments are not made.

A new initiative in London has begun with the aim of helping young people such as Peterson, and others, manage their money. The Money House project, run by financial education charity MyBnk and the Money Advice Service, is aiming to educate “at-risk” young people in deprived parts of London on how to prioritise debts, avoid scams and navigate the banking and benefits system.

It is one of the latest initiatives that attempts to teach children and young people about everyday financial situations and problems. In a separate project, MoneySavingExpert.com founder Martin Lewis donated £325,000 to pay for a financial education textbook for teenagers to be sent to every secondary school in England.

Social housing: more than just a roof over people's heads

The Money House project aims to build financial literacy among 16-to-25-year-olds, teaching them the financial basics of budgeting, finance, debt and avoiding scams to prepare them for life as tenants, both in social housing and the private rented sector. It is hoped this will give them the knowledge to live independently and has been used in Greenwich, Newham, Lewisham and Tower Hamlets.

The five-day course is now mandatory for young people applying for social housing in the four London boroughs, as well as for sheltered housing providers such as Centrepoint, the YMCA and Depaul.

Chantel Bishop, 19, says the project helped her take control of her finances. During the course, she learned to read a payslip and understand her consumer rights. Games and role-play situations that teenagers in her position are used to bring what can be difficult concepts to life.

“I have learned so much, I kid you not,” said Bishop. “They’re not like teachers just telling you what’s going on – they share stories to help you understand. If someone presents you with something, don’t just sign the paper, click OK or say yes – read the terms and conditions otherwise it comes and bites you on the back.” Two of her friends are pregnant and she is encouraging them to attend. “I’m telling you, if this was in school I would be there all day.”

Peterson said that previously she would become stressed when confronted with everyday payments that were due. “I’ve learned about all the different types of credit, so if I get bills I can understand what they mean without panicking,” she said.

It has shown tangible results with a two-thirds drop in eviction rates among those who took the course.

Hawa Tifou, 20, from Newham, went to the course before leaving the care system and moving into a council flat. She says it helped her understand her tenancy and the importance of reading small print. “I would have walked in and just signed off everything thinking ‘whatever’ and probably get kicked out in a couple of months down the line,” she said. “I don’t really stress, because I know what to do and what not to do now.”

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Nick Smith-Patel, education manager and course leader at The Money House, says many at-risk teenagers struggle in large classes at school and are not getting the help they need. “Our maximum group is 10 with a teacher and assistant, and we hold the course in real flats, sitting on sofas and chatting. We don’t talk to them like children, because they aren’t children. Nobody has to earn respect here.” Young people often lose their tenancy after making avoidable mistakes, such as failing to set up a direct debit to pay the rent, while missing one payment can snowball a bad situation. “They have never arranged [a tenancy] before and didn’t read the letter. Sometimes the simple things can make a big difference. It can start with missing one rent payment, after that you can’t stop the pain.”

Sometimes, parents passing on their limited financial information can lead to more harm than good. “A parent may have told them that credit cards are bad, because they had a bad experience, so they assume payday loans must be better,” said Smith-Patel.

Teaching at-risk teenagers about money is itself a cost-saving exercise, according to The Money House. It costs on average £7,056 to evict a tenant from social housing, so it is far more cost-effective to keep them there. Independent valuators ERS estimate some £300,000 in direct savings from the project so far. Given that 10,000 young people leave care annually, MyBnk believes this could save cash-strapped councils millions of pounds. As well as the sharp drop in evictions, ERS found participants were much less likely to owe substantial amounts of money.

Guy Rigden, chief executive of MyBnk, said working with vulnerable young people at these transitional periods was crucial, especially with their social and key workers under immense pressure. “That’s when they are at the highest risk of making the poor financial decisions that can have lifelong consequences.”

‘After the course, I felt I was ready to fully live on my own’

Jade Barnett, 18, from Lewisham, had been living in a foster placement and joining The Money House was a condition of moving out of her semi-independent flat into a council flat under her own tenancy.

The digital media and communications student has a radio show at North Kent College and works four shifts a week at Tesco.

“I do struggle to pay the bills as I am living on my own and only have a single income,” she says.

“I never have spare money to do things for myself, which is hard for me as I’m only 18.” She was looking for practical advice on the best way to borrow money, how to handle credit safely and what to look for on utility or mobile phone bills.

“After the course, I felt as if I was ready to fully live on my own and do everything myself.”