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Brits struggle with financial literacy

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15/03/2018
Don’t know your APR from your CPI? You’re not alone. A study from Cambridge University and University College London has found ‘striking weaknesses’ in adult financial skills.

It showed a third of adults in England struggle to work out how much change they should get in a shop (compared to a quarter globally). Half cannot read a simple financial line graph, often used for conveying financial information, and most struggled to calculate a percentage discount.

England sat alongside Turkey, Chile, Israel, Italy and Spain with the weakest financial skills, while Estonia, Finland and Japan performed well.

The study analysed more than 100,000 results from 16 to 65-year-olds from 31 countries. They were asked four questions assessing their ability to apply numerical skills to everyday financial tasks. Sample questions included ‘If a litre of cola costs $3.15, how much will you pay for a third of a litre?’.

The authors of the survey called for ‘urgent policy intervention’, saying financial literacy was essential to ensure consumers don’t get into unmanageable debt or aren’t vulnerable to being misled.

The report stated: “The ability to solve financial problems is critical to the wellbeing of adults across the world since everyday transactions, such as saving, spending and interacting with banks, require significant understanding of key financial concepts.

“Yet, in many countries, there is concern about the lack of financial acumen amongst adults, and whether education systems are equipping individuals with the necessary basic financial skills.

“Our key conclusion is that, in some countries, policy intervention will be needed to ensure adults have the basic skills they need to navigate their way through an increasingly complex financial world.”

The findings echo a report by The Share Centre, which showed 98% of people believe they left school with insufficient financial knowledge and 55% thought financial education should be a separate lesson within the curriculum and that teachers should be provided with the relevant teaching courses.

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