A new study from Shepherds Friendly, a financial mutual society offering ISAs, life insurance and income protection, has revealed worrying statistics regarding the financial literacy of UK consumers.
In the UK, the cost of living crisis has made it more important than ever to understand the ins and outs of our personal finances. While many have put a closer eye on their money, many are feeling overwhelmed thanks to the prevalence of confusing jargon in the finance world.
In an effort to find out more about how Brits are coping, Shepherds Friendly quizzed 2,003 consumers across the UK on the topic of ISAs, investing and general personal finance.
Just 27 per cent of all participating Brits passed the money literacy test, immediately highlighting significant issues as a pass included all those getting just half of the answers correct. Respondents revealed they know the most about investing (40 per cent), followed by ISAs (34 per cent) and general personal finance (28 per cent). With investing becoming an increasingly popular and accessible method for building wealth, this could explain why Brits have the best knowledge in this area.
The quiz also revealed that the financial literacy of men was slightly better than that of women in the UK. Thirty-one per cent of men got half or more of the questions correct, compared to just 24 per cent of women. Meanwhile, those aged over 55 scored the best on the quiz (scoring 35 per cent), whilst those aged 18 to 24 scored the lowest (scoring 17 per cent).
ISAs, TikTok and TV
Shepherds Friendly found that ISAs are one of the weakest knowledge areas in the UK, revealing that just one in three are putting their savings into an ISA. Those aged 18 to 24 were the least likely to do so (24 per cent). Meanwhile, 43 per cent are putting their savings into other types of savings accounts.
More than a quarter (26 per cent) admit to keeping their savings in a current account where their savings fail to make interest.
Whilst the survey also revealed that Brits are mostly sourcing information on personal finance from their banks (29 per cent), it might not come as a surprise that Gen-Zs are mostly getting information about personal finance topics from TikTok (26 per cent).
Meanwhile, TV shows (such as The Martin Lewis Money Show) emerged as the second most popular way for Brits to gather information on personal finance topics (25 per cent). It is also the most common way those aged 55 and over (36 per cent) are sourcing their information on money-related topics.
Derence Lee, chief finance officer at Shepherds Friendly, discussed the findings of the study. Lee said: “It’s never been more important to take time to understand our personal finances and make sure we’re utilising methods to help grow and protect our savings.
“Our study shows that there are areas of personal finance that many people struggle with. In particular, we found individuals lack confidence in their knowledge of ISAs. Whether you’ve never attempted to save before or are struggling to manage a realistic savings goal, there are simple steps you can take to help grow your personal finances without feeling overwhelmed.”
