51% of Brits fail money literacy test

More than half of adults in the UK are uncertain about common financial terms, a new survey has found.

Shepherd’s Friendly polled 2,000 people across the country to test their knowledge of various personal finance issues and products.

But even though 87% said they were confident in their financial knowledge, 51% failed to pass the test.

Interestingly, Isas proved to be the most complicated area, with just 44% passing questions on this topic.

By contrast, 69% successfully answered questions on life insurance, while 72% passed on general personal finance.

Brits want financial education

Despite many adults mistakenly being confident in their own financial knowledge, the idea of educating people about concepts such as budgeting, investing and saving appears to be very popular. 

Six in ten adults said they believe financial education should be taught in schools, as it isn’t currently a compulsory part of the curriculum.

Meanwhile, almost one in three said they’d like to improve their own personal finance knowledge so they could better plan for the future.

This backs up our own recent survey, in which 83% of our customers said receiving financial education would have made a big difference to their current situation.

That’s why we’ve called for better financial education in schools, as it would help to improve prospects for all children and set them up to make more informed decisions regarding their money.

It might also have widespread mental health benefits, as the Shepherd’s Friendly study found that 15% feel overwhelmed trying to make sense of their money, while 17% believe their finances have negatively affected their mental health.

Young adults most lacking in financial knowledge

Perhaps unsurprisingly, younger adults were found to be the least knowledgeable about financial matters.

Just 14% of 18 to 24-year-olds passed the financial literacy test, whereas 67% of those aged 65 and above were successful.

This lack of knowledge is possibly contributing to a strong sense of anxiety among younger adults regarding money.

For example, 29% of 18 to 24 year olds said financial pressures weigh heavily on their minds, compared with just 4% of over-65s.

In addition, more than one in four 18 to 24 year olds said they struggle with financial stress.

At the same time, one in five young adults admitted they know more about what’s happening in popular culture than with their own personal finances.

Interestingly, 45% of those polled said they believe young people don’t have enough chances to learn about personal finance.

This view may be informed partly by their own financial regrets, as many felt they had made mistakes such as not saving more when they were younger, not investing earlier and not saving enough in their pension.

But significantly, another common regret was not teaching themselves more about personal finance and managing their money.

Knowledge and education could be the key to ensuring people make the best financial decisions and avoid issues such as problem debt - and this latest survey suggests there is a clear appetite for it.