EXPERTS have blamed an “industrial-era curriculum” for the outcome of new research from Santander showing that seven in 10 (71%) Brits feel confident in their knowledge of money — but only 40% could answer a simple question on inflation.
2000 UK adults were asked the question — ‘Assuming the annual rate of inflation halves in your country, but stays above zero, which of the following will be true about the general cost of goods and services in general this time next year?’ — and given a selection of responses.
The research, carried out across countries globally, also found that financial confidence is more pronounced amongst men than women, with 77% of men saying they feel financially knowledgeable compared with two-thirds (66%) of women, yet only 45% of men and 34% of women answered the simple inflation question correctly.
Another finding of the research is that financial education is seen as one of the most important subjects, ranking second (95%), just behind maths (97%) and ahead of literature (94%), science (91%), history (83%) and geography (82%). Yet almost nine in ten (86%) people say they never received any financial education at school, with three-quarters (75%) wishing they had.
Almost half of adults (48%) wish they’d had more education around pensions in school, and 47% wish they had been taught about taxes. Over two fifths (45%) wish they had been taught about mortgages and investing.
The new research comes after last month’s Government announcement to make financial literacy a compulsory subject in all primary and secondary schools by 2028.
Mike Regnier, CEO of Santander UK, said: “With the current pressures on people’s purses, understanding money has never been more important. Our research shows that people want practical financial skills — from understanding taxes, to planning for pensions.
“Financial education is no longer optional; it’s essential. Every young person should leave school knowing how to budget, save and plan for their future.”
Rohit Parmar-Mistry, Founder at Burton-on-Trent-based Pattrn Data, was unsurprised by the findings and says they reflect a key failing at the heart of our education system: “It is hardly surprising that adults are failing basic money questions when our education system is still obsessed with an industrial-era curriculum.
“We have government leaders who seemingly struggle with basic economics, yet we expect teenagers to leave school financially literate because they sat through a generic maths lesson?
“The fact that the public now ranks financial education above science and history speaks volumes. They know they have been short-changed. Until we treat financial literacy as a life skill rather than an optional extra, we will continue to see this embarrassing gap between confidence and competence.”
Colin Low, Managing Director at Ipswich-based Kingsfleet, a wealth manager, also pointed the finger at the curriculum while offering a simple fix: “Since the introduction of the National Curriculum, the increasing perception is that education is taught in order for students to pass exams rather than to prepare them for later life.
“It would not take much for a maths course to introduce financial topics to apply subjects like percentages and fractions to real life monetary scenarios.”
Low had another suggestion: “On a local level, financial professionals need to step up and offer pro-bono services to local schools and colleges to help them provide this knowledge to their teenagers which will benefit society as a whole.”
Tony Redondo, Founder at Newquay-based Cosmos Currency Exchange, said: “There is a striking gap between perceived and actual financial literacy in the UK. In fact, the disconnect is brutally stark. While most people feel confident about their money knowledge, less than half can correctly answer a basic inflation question.
“The challenge lies in understanding that halving inflation doesn’t mean prices fall, just that they rise more slowly, a simple distinction between the rate of change and direction of change.
“Encouragingly, financial education now ranks second in importance among school subjects, implying there is growing public recognition that this knowledge gap needs addressing.
“There’s a clear appetite for better financial education, which makes sense given how fundamental these concepts are to everyday life, from understanding mortgages and savings to making sense of economic news. Financial literacy lessons should be mandatory in British schools to bridge this critical gap.”
Ranald Mitchell, Director at Norwich-based Charwin Mortgages, said the research highlighted the need for advisers to keep it simple: “It’s alarming that seven in ten people think they understand money, yet most can’t answer the simplest question on inflation.
“This gap shows just how vital it is for advisers to use clearer, jargon-free language when helping customers make big financial decisions, allowing them opportunity to understand the benefits of what’s on offer to them.
“We need to empower people, not intimidate them. Financial education must be dragged into the 21st century and embedded properly in the school curriculum. Real-life, relevant money skills are no longer optional. They’re essential if we want confident, financially resilient adults.”
Scott Gallacher, Director at Leicester-based Rowley Turton, said people tend to overestimate their competence in most areas of life and that it’s not surprising that there’s a significant difference between people’s confidence in their financial knowledge and what they actually know.
He added: “We’ve even seen senior politicians mix up key terms like deficit and debt. Also, financial jargon can be confusing, as the financial services sector often uses the same word to mean different things.
“For example, the simple word ‘bond’ means at least three different things to a financial adviser. The lesson from this research is clear: most people should seek professional advice when it comes to financial matters, even if they think they know what they are doing.”
Samuel Mather-Holgate, Managing Director & IFA at Swindon-based Mather and Murray Financial said the ripple effects of a lack of financial education can be extreme: “For years, the financial services industry has been calling for better education on money, starting at school. This report shows the drastic level of money incompetence in society that leads to money problems, and wider societal issues.”
Photo by Emily Morter on Unsplash
