‘New Year’s resolutions’ Kevin Gray CEO, @BathBuildingSoc
At a recent meeting, I enquired as to what was the main reason for our underwriters turning down applications for our mortgages. The response was slightly shocking (to me at least) and more than a bit worrying. Undeclared, unsecured credit was the answer that I got.
When our underwriters inform applicants that they have not declared all of their credit cards, they repeatedly get comments along the lines of “oh….but that one is interest free so I didn’t think it was necessary to declare it”. It is clear that many do not understand that ‘free credit’ still has to be repaid one day and that responsible lenders have to take all current credit into consideration as part of the normal loan application process.
Being inquisitive about how much (or how little) young people know about borrowing and money, I forced a conversation the other night with my daughters about their finances and their student loans. Rather disappointingly, I quickly realised that they did not fully understand what they have got themselves into. They certainly did not understand how the mechanism of compound interest would negatively impact on how much they will potentially have to repay to the government over future years.
When Tony Blair was asked, ‘what are your top three priorities as Prime Minister?’, he responded ‘education, education and education’. It’s fair to say that he probably wasn’t thinking about financial education at the time, but Blair fully understood how education can have a transformative effect on society.
Bath Building Society considers itself to have a moral responsibility to educate the young about business and finance. As we move into 2019, the Society has resolved to do something to help young people to better understand how business works, and more importantly, how personal finances need to be operated. Hopefully we will be able to help avoid future Mr Micawber ‘misery’ type situations from occurring.
In 2018, the Society has sponsored a team from Bath College to participate in the Young Enterprise (YE) scheme. This fantastic programme encourages young people to start and to run small businesses. YE will be familiar to many as it has been running for decades. Rather depressingly, and most probably due to very stretched school budgets in this age of austerity, none of the state schools in Bath participated in the scheme in 2018. Our Society is aiming to support a minimum of four Bath state schools in 2019 to participate in YE and we have the aspiration to do more in future years. Hopefully a new generation of Bath entrepreneurs will be created!
In 2019, the Society is also sponsoring a series of financial education seminars to be held in Bath state schools that have sixth forms. The aim is to improve pupils’ understanding of how personal finances should ideally be operated.
As we enter 2019, I personally resolve to do all the usual things like drink less wine, exercise more, go to bed earlier etc. I am however going to be more aspirational in this New Year. I will be aiming to manage my own finances that little bit better and to perhaps put a bit more aside into the Kevin Gray rainy day fund. Maybe you might also be thinking of doing the same? If you are, then our Customer Support Department will be only too willing to give you advice as to what we could potentially do for you. Give them a call on 01225 423271.
On behalf of Bath Building Society, I would like to wish you all a very happy and prosperous New Year. I especially hope that our YE teams have great success with their small business ventures!