How Good is the UK’s Financial Literacy?

Our recent survey results showed just 35% of respondents, aged 14 to 35, were able to correctly answer one or more questions on topics from the financial literacy curriculum, and questions linked to products offered by Foresters Friendly Society. Almost a quarter didn’t know the answer to one or more of our questions. Read on for more insights and put your own understanding of money to the test – with our Financial Literacy Quiz!

Having a good understanding of how money works has always been important in helping us manage our personal finances. It’s the foundation that allows us to make informed financial decisions when it comes to saving, investing, spending and borrowing.

In 2014, Financial Literacy education became part of the National Curriculum for children in English secondary schools. It has been part of secondary school curriculums in Northern Ireland, Scotland and Wales for even longer.

Financial education is hugely important to us here, at Foresters Friendly. So, almost 10 years on from the introduction of Financial Literacy across UK schools, we wanted to see what impact it’s had on people’s understanding of personal finances.

Our Methodology

We asked 2,000 people in the UK aged between 14 and 35 how they felt about finance and where they sourced their financial information from when needed. We also asked them to take our Financial Literacy Quiz, made up of seven questions involving topics covered in the financial education curriculum, as well as those we believe everyone in the UK should have an understanding of.

What did we find out – are the UK’s Financial skills up to scratch?

of respondents are currently receiving financial education in secondary school or did when they attended secondary school.

of respondents rely on parents for financial advice, followed by the Internet (46%) and their bank (37%).
– Almost a third look to social media to source financial information.

 

claim they have a good or somewhat good understanding of personal finance.
– 3% said they have no understanding at all.

35% of respondents answered at least one (out of seven) of our Financial Literacy Quiz questions correctly.
– 23% said they didn’t know the answer to one or more of the questions.
– 43% answered correctly about inflation and how it impacts prices in the UK.
– 81% weren’t aware of how old you need to be to hold investments in the UK.

Is there a lack of Financial literacy in young adults?

To get a better understanding of the financial literacy curriculum’s impact on people’s personal finance knowledge, we compared data from:

  • Gen Z (aged 14 to 25) who have received or are currently receiving financial education in secondary school.
  • Millennials (aged 26 to 35) who haven’t received any financial education in secondary school.

Interestingly, the majority of respondents (across all age groups) believe they have a good to expert understanding of personal finance75%, across both Gen Z-ers and Millennials.

However, when put to the test with our quiz, the majority either answered questions incorrectly or didn’t know the answers. We saw:

  • A slightly higher proportion of Gen Z-ers (39%) know how much you’re able to save in an ISA each year compared to Millennials – where only 33%  knew the correct amount.
  • They were closely matched when it came to their understanding of how inflation works – with 48% of Millennials and 46% of Gen Z-ers answering correctly.
    – Of those that were unable to answer the question correctly, one in three Gen Z-ers admitted they didn’t know the answer over taking a guess. Double the amount of Millennials answered this question incorrectly over saying they didn’t know.
  • Around two fifths of both Gen Z and Millennial groups know when you pay interest on a credit card.
    – However, nearly 20% of Millennials thought you had to be aged 21 to have a credit card. Only 10% of Gen Z-ers thought this.
  • Between men and women, there was an even split when it came to who had the most financial knowledge.
    Slightly more men had a better understanding of interest rates.
    – Slightly more women had a better understanding of how inflation works.
  • People in Scotland got the most answers correct, followed by England in second, Wales in third and Northern Ireland in fourth.
  • Respondents who worked in education and healthcare were amongst the top performers when it came to correctly answering the questions.

Do people understand ISAs?

ISA’s (Individual Savings Accounts) are amongst the most popular financial products around. So, we weren’t too surprised to see that almost 60% of respondents knew what the acronym ‘ISA’ stood for.

However, we were surprised to find just 29% knew how much money could be saved in an ISA on an annual basis. This is interesting, as it’s more important to understand exactly how an ISA works and the impact it can have on your savings, rather than simply knowing what the acronym stands for.

Around 58% of respondents also believe you need to be 18 to hold investments in the UK. This is incorrect – with the Junior ISA, parents or guardians can open up a savings account for their children as babies, and save up to £9,000 per year for their futures.

Please note, if you choose to save in a Foresters Friendly Stocks & Shares ISA or Junior ISA you should be aware that due to the nature of our investment, the value of the plans may fall as well as rise and you may get back less than you have paid in. Tax rules may change and depend on individual circumstances.

Has Financial education had a positive impact?

We can see a higher proportion of Millennials answered correctly across all questions on our quiz.

Sally Waterfield, Head of Marketing, Foresters Friendly Society, said: “These results really surprised us. We’d have expected the introduction of financial education to the National Curriculum to have been more positive in its impact on young people’s understanding of money. Financial skills are absolutely invaluable throughout all stages of adulthood – putting us in the most informed position to make big life decisions. Our survey results have highlighted just how much work there still is to be done around equipping not just Gen Z-ers but Millennials too with the right financial skills.”

Are you Financially literate – take our Financial Literacy Quiz!

Want to put your financial knowledge to the test? Take our Financial Literacy Quiz below to find out.


Data source

The research was conducted by Censuswide with UK respondents aged 14 to 35 years old between 17/10/23 to 18/10/23. Censuswide abide by and employ members of the Market Research Society which is based on the ESOMAR principles and are members of The British Polling Council.

This blog is intended to provide information, not financial advice, to help you make an informed decision about savings and investments. We do not offer financial advice. You should contact a financial adviser, who may charge a fee, if you want advice.