By David Field

Can you tell your IPA from your ISA? Do you know what the current CPI rate of inflation is?

If not, you are not alone, as increasing numbers of Britons are suffering from "financial illiteracy," financial observers have warned, with this lack of knowledge a major factor in people being unable to manage their personal finances and getting into bad debt.

The problem was recently brought up in Parliament, with several MPs joining forces to promote the introduction of financial education within UK schools, arguing that this must become a key part of the curriculum, alongside the more traditional subjects of maths and English.

At present, only the independent IFS School of Finance provides formal examinations for young people in the area, offering GCSE, AS and A level qualifications in Personal Finance.

While the Government recently announced that it intends to integrate the subject into the GCSE maths syllabus, many, including the Liberal Democrats, feel that even this step will fail to adequately address the problem.

Addressing the House of Commons, Phil Willis MP, the former education spokesman, argued: "Today's young people face a more complex financial picture.

"It appears that as we have become more affluent we have abandoned our senses when it comes to finance."

Such rhetoric is no exaggeration, when recent statistics are taken into consideration.

A recent study found that one in four of all 16 to 21 year olds believe that store cards offer consumers a better deal than credit cards, while one in three of those young people questioned don't understand the term APR.

Given, this situation, the main question is not whether the government needs to address the issue of widespread financial illiteracy, but how this can be achieved.

While many would argue that it is the role of the parents and family to teach their children about vital financial matters, studies have also found that the subject is essentially taboo within British households, with one in three of parents admitting that they don't discuss debit and credit issues at home.

The solution, therefore, is for this to be taught within the classrooms, before the youngsters are allowed access to their own credit cards and personal loans.

"There is evidence to suggest that having a standalone qualification in personal finance would change the behaviour of young people and equip them with the necessary skills to make informed financial decisions," said Phil Hall, public affairs manager at the IFS School of Finance.

Given that personal debt within the UK has risen by ten per cent over the last twelve months to £1,310 billion, something needs to be done to make sure the numbers of people seeking IVAs and declaring themselves bankrupt doesn't continue to rise, supporters of financial education argue.

Money matters, which are central to everybody's life, need to be prioritised alongside the study of history and geography within Britain's schools, particularly now that today's young people are looking at amassing up to £20,000 in debt should they wish to gain a university education.