According to a recent study by Money Advice Service, 40% of adults in the UK are financially illiterate. The entire survey was carried out on a group of 5000 UK citizens from different sectors of the economy.
According to the study, one in five adults in the UK does not know what the jargon on their bank statement means. It is also very worrying that a huge percentage, 40% have less than £500 saved up in their account for a rainy day. This also has huge impact on how people vote on pertinent issues that affect their lives. The study reveals that about a third of all adult citizens cannot count the percentage increase in their savings accurately.
Poor Financial Management
The study dubbed Financial Capability of The UK is quite worrying. It reveals that most people do not even understand the benefits of starting to save early for retirement. It also reveals that a huge number of people who are in debt do not know where to seek help. The report states that about 80% of all people who are too much in debt are not aware that there is financial advice that could help them. The level of financial illiteracy in a developed country such as the UK is simply shocking.
The Young Most at Risk
According to the study, young people between ages of 18 to 24 years have the highest rate of illiteracy. For instance, about a quarter do not keep an account of the money they receive and spend. A key indicator of just how ill equipped young people are is the revelation that 59% of them cannot calculate basic interest.
The study also revealed teamwork was also quite important in dealing with financial issues. The study revealed that half of couples who hold regular discussions on financial issues have better financial stability. People are encouraged to reach out and talk these issues out with their partners. Financial discussions within the home really do help.
Implications to economy
This study has serious implications for the entire economy of the UK. It means that the business owners may also not be very good in financial issues. This could have serious consequences if things ever took a turn for worse.
The report recommends increasing the level of financial literacy in the country. It should start at an early age, where children are taught issues on responsible financial management. In addition, programs should be established that cater specifically to teaching adults about financial management. This could really have positive results for the entire UK economy. The fact that so many people are unaware of their finances should be worrying for both financial institutions like those applying for a car loan and the government. This report should inspire them to take drastic measures to boost financial education in the UK.
This is clearly not a problem that can be solved in one day. Everyone should cooperate to avoid a potential looming disaster. This includes making financial education part of the school curriculum. It is important that children from early on how to manage financial resources responsibly.