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Better Financial Education And Budgeting Skills Best Way To Escape The 'Jams' Jar

23/11/2016 10:46

"No Jam today", "pump up the Jams", Chancellor in a Jam": an initially staid acronym for 'Just About Managing' families coined by the new Chancellor of the Exchequer has morphed into a major political buzzword in just a matter of days. At its current growth rate, it's got all the ingredients of a meme.

Now none of us know for sure the exact details of what Philip Hammond will announce in his inaugural Autumn Statement but we expect there to be more than a passing reference to the Jams: low to middle income earners who are in full-time employment, receive little, if any state benefits (because they earn just a tiny bit too much), and are most vulnerable to even the smallest changes in their financial circumstances.

Cast an eye into the future and there probably needs to be more than just a passing reference: it's not exactly looking rosy for the Jams, of whom, according to the Resolution Foundation think tank, there are roughly six million in the UK at present. Growth forecasts are likely to be cut, while most observers agree that the collapse of Sterling in the wake of the EU Referendum vote has put inflation on an upwards trajectory, with some experts saying it could hit 4% in the latter half of next year alone.

A weaker economy, with higher inflation, will apply huge additional pressure on the wallets of families who already have very little disposable income once all the bills and outgoings have been paid - and little, if anything at all, left to save for the future. Not that, with interest rates so low, many of the Jams feel it's worth saving anyway: on most high street bank accounts you'd be losing money in real terms, while they generally don't have the money to make the most of the various tax incentives available to higher earners.

We'll find out on Wednesday for sure but policies to help the Jams could range from an increased personal allowance and freeze in fuel duty to improved childcare support or somehow a slowing down or even reversal of universal credit cuts. Any and all of these could provide a degree of genuine financial support for lower earning families, and give them that all-important extra breathing space.

Of course, that's as long as it's not negated by a subtle tax tweak here or an artful policy change somewhere over there. And it's precisely this dependence on even the smallest policy and tax tweaks that makes the Jams so vulnerable. But it's a vulnerability that can, to an extent anyway, be addressed and controlled: through improved financial management and budgeting strategies.

The fact of the matter is that too many people in the UK today, through no fault of their own, are still not great at managing their money and making it last. A much bigger emphasis needs to be placed on educating younger people about personal finance and budgeting issues, which would give them a degree of resilience whatever the economy and future Governments throw at them.

Unless you believe in a future economic utopia, there will always be Jams but the better able these people are to manage their financial circumstances, however challenging, the better they will be able to pull through -- and finally escape the jar.

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