With rising everyday costs as well as interest rates, it is increasingly important, for those in the fortunate position to have some disposable income, to be savvy about their finances. To chart a way through the myriad of financial products requires a degree of financial literacy. Yet just how financially literate is the average person?
One approach to examine financial understanding was through a study undertaken by the website money.co.uk. the study surveyed 2,000 people in the U.K. to reveal just how financially literate the nations are. In terms of outcomes:
Financial literacy survey results by age
| Questions | 18 – 24 | 25 – 34 | 35 – 44 | 45 – 54 | 55 + | Overall |
| % of people who have taken out a financial product without fully understanding how it works | 59.66 | 67.19 | 70.90 | 69.21 | 54.36 | 64.45 |
| % of people who regretted entering into a financial agreement they didn’t fully understand | 61.45 | 63.34 | 67.00 | 64.01 | 50.74 | 62.55 |
| % of people choosing not to take out a financial product due to not understanding the jargon surrounding it | 64.73 | 71.55 | 65.41 | 66.88 | 61.58 | 66.90 |
Over 60 percent of people have taken out a financial product such as a mortgage or loan, without fully understanding how it works. The 18 to 24 age group were most likely to jump into a financial decision like this, as indicated by 40.34% percent of the cohort.
In all, 62.55 percent of people said that they regretted entering into a financial agreement that they did not fully understand. Of the demographic groups, the over 55s were least likely to have regrets, with 50.75 percent saying they had some misgivings.
The issue of having ‘fanatical regrets’ increases proportionately with age, until ages 55 and over are reached and here it falls to only half expressing regret.
Around two-thirds of people said that they had been put off taking out finance due to needing to understand the various jargon that comes with it. Those aged 25 to 34 were most likely to avoid a financial product due to jargon (71.55 percent) compared to just 61.58 percent of those 55 and above.
Financial literacy survey results by salary
| Questions | Under £15,000 | £15,000 to £29,999 | £30,000 to £44,999 | £45,000 to £74,999 | £75,000 to £124,999 | £125,000 or more |
| % of people who have taken out a financial product without fully understanding how it works | 58.87 | 62.57 | 67.73 | 69.81 | 67.68 | 70.00 |
| % of people who regretted entering into a financial agreement they didn’t fully understand | 62.06 | 66.08 | 68.09 | 60.38 | 60.10 | 65.71 |
| % of people choosing not to take out a financial product due to not understanding the jargon surrounding it | 66.31 | 69.30 | 67.38 | 70.28 | 63.64 | 68.57 |
The highest earners were more likely to jump into a financial agreement, with 70 percent of people earning £125,000 or more say they’ve done so without fully understanding how it works. In comparison, just 58.87 percent of those earning less than £15,000 said they had done the same.
Those earning £30,000 to £39,999 were the income group most likely to have regrets when it comes to entering a financial agreement that they did not fully understand, with 68.09 percent saying they did. As the median UK salary is £33,000, the average person in the U.K. falls into this category.
Those in the mid to higher range salary bracket of £45,000 to £74,999 were most likely to decide against taking out a financial product due to the jargon surrounding it. Alternatively, at 63.64 percent, earners of £75,000 to £124,999 salaries were least likely to worry about financial jargon stopping them from making financial decisions.
