Thursday 30th of September 2010
Individual voluntary arrangement (IVA) questions might help demonstrate to cash-strapped Britons that there is a way of getting out of the debt they have amassed over a long period of time.
According to Wendy van den Hende, chief executive for the Personal Finance Education Group, it's important for people to learn about finance from an early age, as a lack of understanding could have "disastrous results" for decades.
There is even more of a risk if individuals' heads are turned by products such as credit cards and personal loans after they finish school as they try to decide how best to "manage their lives", she adds.
The expert goes on to note a lack of financial understanding can have a big impact on money troubles in the future too.
She says: "If you look at the situation that, as a nation, we have got ourselves into over the last decade or so - we've become increasingly indebted and we've been spending more than we earn.
"Many people's debts are more than their annual salaries and you wonder how they can actually pay them back."
Questions on IVAs may, though, offer significant breathing space to UK adults who started racking up debt at a relatively young age and now owe more than £15,000 on unsecured financial products.
The process chips away at the deficit over a time period of around five years and could make finances more manageable, as it freezes the interest on outstanding balances and merges all credit repayments into one monthly outlay.
Ms van den Hende's comments come as research from price comparison service uSwitch.com reveals a lack of financial education has had a detrimental effect on a large number of Britons.
The study shows 24 per cent have been hit with charges because they didn't understand the terms and conditions of a specific product, while 71 per cent say the reason they are in the red is because they don't understand their monetary situation.
By Kimberley Parsons
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