Education to understand debt is vital.
The focus here is on the young but it would help at every age band.
From small mortgages to large mortgage loans all debts should be considered carefully.
The Association of Chartered Certified Accountants believes more now needs to be done to educate the next generation on the effective management of debt.
Members of the ACCA have warned that a `significant increase` in the UK`s levels of consumer credit since the global economic crisis have led to many people facing the problem of over-indebtedness. It is therefore an issue that that the government needs to wholeheartedly consider how to address as a top priority in the coming years.
Head of policy for ACCA UK Anthony Walters believes that greater emphasis therefore needs to be placed on educating young people in particular on responsible money management, as doing so will help to stand them in good stead to avoid the pitfalls of becoming over-indebted.
Figures published by The Money Charity show that, as of March this year, the total value of personal debt in the UK stood at £1.47 trillion. This represented just over £29,000 for every adult in the UK.
Furthermore, this figure now stands at 111 per cent of the average annual wage in the UK, meaning increased education on the impact of debt and how it can be managed effectively is essential.
Mr Walters stated that the ability of vulnerable groups to manage when faced with significant debts is something that needs to given serious debate, as currently, a significant number of under-18s are themselves already racking up debts.
On average, the typical school leaver in the UK will have debts of almost £900. As a result, the ACCA has proposed the creation of a new ISA savings incentive scheme that would be targeted specifically at this group.
By offering young people a matched savings account for up to £1,000, it is hoped that this would encourage more people to enter adulthood in a more healthy financial situation.
Mr Walters concluded: `Once the next generation leave education and enter the world of work, we know that an increasing number of them are seeking a new type of career with flexibility at its core.
`This has clear benefits to Britain`s economic future, but also come with risks. A sound understanding of financial management that is practical enough to be applied to the real world is vital to becoming successful, worry-free adults
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