11-year-olds in Southwark will be given a helping hand with their finances, thanks to a new Southwark Council initiative, believed to be the first in England.
This spring, every child aged 11 in the borough will be offered the chance to set up their own bank account with the London Mutual Credit Union. All those who do so will find £10 in their account, to help them get their savings under way.
The scheme, which will cost the council £60,000, has been designed to help young people understand the concepts of banking and saving from an early age, giving them the tools to manage their money into adulthood.
Cllr Fiona Colley, cabinet member for finance, strategy and performance, said: “For many of us, opening a bank account was a rite of passage, but there is still a surprising number of people who don’t have a bank account, and who therefore are limited in their options for saving and borrowing.
“This great initiative will encourage young people to think about their finances, to plan for the future, and hopefully avoid the lure of payday lenders as they get older.”
As parents must accompany their children to the credit union to set up an account, it is also an effective way to introduce many adults to the benefits of saving with a credit union. It is estimated that as many as 5 per centof people in the UK have no bank account at all. In a climate where many residents are turning to extortionate payday loans to pay their rent or buy clothes for their children, the council is determined to help residents find positive alternatives.
Cllr Stephanie Cryan, deputy cabinet member for financial inclusion, added: “Southwark Council has been working hard for some time to help alleviate the severe financial problems some of our residents experience, by supporting local food banks, clamping down on payday lenders, and offering short-term financial support.
“However, we wanted to do something more long-term to help nip some of these problems in the bud and help our residents take control of their finances. If we can get people back on their feet financially, not only do we give them confidence but we also reduce their dependence on the council and other services – a real example of invest to save.”
The council has written to the parents of all eligible children to invite them to set up an account and claim their £10. Schools have also been encouraged to teach pupils about personal finance.