In the run up to Christmas, a presenter on a morning news show was discussing the numbers of young people with debt and reflected on the need to teach financial skills in schools to prevent young people racking up debt when they start to live as independent adults. He felt that if young people had the skills to understand budgeting and the cost of credit then this situation could be prevented. Yet if you ask teachers, they will tell you that they do teach financial skills in schools. So what is going wrong? Why are people not using the skills they learn at school?

Whilst understanding how to calculate interest rates and how to work out a budget are essential life skills, no one seems to be focussing on teaching anyone about the psychology of spending. This is a concept that advertising companies have turned into an art to get people to spend money on things that they probably would not have chosen, but are lead to believe they must have. It is not based on people’s needs or preferences but on values or fear. The message is that if you have this item or spend on this activity then you will fit in and will be acceptable in society. So we buy branded products when non-branded will do perfectly well, we buy more than we need for fear we will run out and everything will be ruined. We over spend and then throw away what we don’t use, like the 2 million kilos of cheese that will end up in the bin every Christmas. We completely forget all those financial skills we learned at school because fitting in and avoiding the embarrassment of not having enough cheese are driven by powerful emotions that push aside logic in that moment. Maybe we should teach young people emotional intelligence so that they stand a chance of using their financial skills thereby avoiding debt. We would also waste less cheese.