Poor numeracy and literacy skills make day-to-day life difficult, but in a recession, they can be crippling. A new website aims to help people to improve their financial literacy and to avoid falling into debt, writes EDEL MORGAN
THE RECESSION is merciless for those with financial literacy problems. Being financially savvy is a life skill and if you can’t budget, bargain, juggle payments, read the small print in financial contracts and understand banking terms, you can find yourself sinking into a mire of debt.
Inez Bailey, director of the National Adult Literacy Agency (Nala), says it’s hard for most people to manage their money in a tough economic climate but “it’s even more challenging for people with numeracy and literacy problems who are not able to educate themselves about financial matters. It can leave them exposed and vulnerable.”
A new educational website aimed at adults with financial literacy issues – makingcents.ie – has been launched by Nala and the EBS building society.
A number of people shared their stories at the website launch, including a man who was made redundant and went to a financial provider who advised him to invest his lump sum in shares. “He signed a document that he clearly didn’t read. He didn’t understand there was a risk of losing money. He lost his redundancy money and was on a low income,” says Bailey.
She says a significant minority would never dream of saying “stop, I don’t understand” to a bank official or a financial adviser. “They don’t want to appear stupid and feel like they are the only person in that situation.”
Studies have shown there’s a low financial literacy level across all social classes. In 2006, an EBS and Nala survey found that only one in three Irish people knew what APR stands for in a multiple choice question and, in 2008, a National Irish Bank and Danske Bank survey deemed our young people financially naive compared with their European counterparts. The last Organisation for Economic Co-operation and Development (OECD) international adult literacy survey found that almost a quarter of adults have difficulties with simple numeracy tasks such as adding up a bill, understanding a pay slip or filling in a form.
Brian Fagan, who left school at 14 with poor writing and numeracy skills, knows he needs to budget and plan for the future but finds it difficult. The 50-year-old Meath man is unemployed and lives alone.
“I hand out €50 for this and €40 for that. I keep going until I’ve nothing left and then I’m surprised when it’s all gone.” He’s learning budgeting skills on a numeracy course and, while improving, he still finds it hard to make his money stretch for a week.
He sometimes “squanders” money on overpriced items he hasn’t researched properly. “I find it hard to shop around. I can’t look for items online like people who read and write, so I just jump in and buy. Before I started the course, computers were foreign to me, and I didn’t have the money to buy one so I’d steer clear.”
His limited writing skills mean that even paying for items can be an ordeal. “I’m able to write a cheque but if I was trying to sign it and there were people watching me, I would have been in an awful state. I wouldn’t do it at a counter. I’d try to sign it privately.”
Fagan is studying Junior Cert maths and is getting to grips with mental arithmethic and percentages, but finds supermarket vouchers and store reward card systems complicated. “I tend not to bother with them. I look for the simple things in life.”
He doesn’t see his progression to Junior Cert maths as a personal triumph. “I find it okay but, at nearly 51 years of age, saying to people that I’m doing my Junior Cert, it doesn’t cheer you up. You realise how far behind you are.”
Inez Bailey says that without basic maths, even a trip to the supermarket can be a minefield. “You might be faced with similar products on special offer, one might be ‘buy two, get the third free’ while the other might be on discount. You have to do the permutation in your head. Often, these offers are gimmicks and you have to be savvy to know which is the real offer.”
Keith O’Connor from Cork ran a building firm during the boom that once employed 20 people. “You don’t need an education to make money, but you need it to hold onto it,” he says, recalling how he was ripped off repeatedly by people who took advantage of the fact he couldn’t read or write. “I’d use a Visa card as much as I could. If I wanted to buy or hire something I’d pay by Visa, and the interest started to mount up.”
He was able to sign cheques but would get creditors to fill in the rest. He lost substantial amounts of money when some of his creditors wrote cheques for higher amounts than they were owed. “With no education, I didn’t spot it until it was too late. There were bills coming in the door and I’d throw them into a filing cabinet. I didn’t care once a lad’s wages were paid.”
He lost €15,000 when he went into partnership to buy machinery. “We went halves to buy it but there was no written agreement and he went off with the machine,” says O’Connor, who has since returned to education.
Olive Phelan from Tallaght says she never went into banks or had a bank account before she went on a Nala programme. “I avoided it at all costs. I didn’t have a bank account, didn’t apply for loans or have a mortgage. You had no expectation of yourself, you just avoided those things.”
She says the credit union was a great help because the forms are simpler and the staff more approachable. “I felt banking terms were over my head. I didn’t know about interest rates or percentages and I didn’t like the idea of sitting across from someone at a big desk in the bank.”
Bailey says some people end up turning to money lenders because “their rates might be higher than banks but, unlike the banks, they deal in plain English”. She says adult education is very poorly resourced in Ireland, “far behind other English-speaking nations such as the UK, Australia, New Zealand and Australia”.
“There’s a need for more education that people with lower levels of literacy can access. Financial institutions also need to lessen the jargon and be more transparent to the customer. That way they might start to build trust back up.”
For more information, see makingcents.ie
