Money expert: Children need to be taught lessons in debt

London schoolchildren need lessons in spending money to help them cope with living in the consumer capital of the world, experts said today.

It comes as more than 120 MPs launched a campaign to make financial education compulsory in schools.

Members of the new all-party parliamentary group on financial education for young people said it was vital that students were taught about debt before university tuition fees triple.

And money-saving expert Martin Lewis said children in London faced unique cash worries and urgently needed to be taught how to choose the best deals and when not to spend.

He said: "In London, schoolchildren need to understand how finance works more than anywhere else. They are living in one of the capitals of consumerism in the world. There is immense peer pressure and inflationary gift-giving among parents."

Mr Lewis revealed he had met schoolchildren who believed they would not have to pay for items bought on a store credit card. He added: "I asked a group of 15-year-olds how old they would be when they paid off a credit card bill of £3,000 at 17.9 per cent if they only made the minimum repayments.

"Some said 20, some said 30, but the answer is 60 years old. Kids are not stupid, but we are a financially illiterate country and are bad about talking about money." Mr Lewis, who created the website moneysavingexpert.com, also criticised the Government's decision to allow variable rates of interest on student loans.

He said: "It's a national disgrace that in the 20 years since student loans launched we've educated our youth into debt, but never about debt. We simply can't let students take this debt out unless they know how it works."

A spokesman for the new all-parliamentary group said more than 97 per cent of people support teaching financial education in schools, based on a survey of 8,000 people.