Nearly half of UK adults say they need urgent help managing their day-to-day finances as the cost of living crisis and rising energy bills threaten to plunge millions of household budgets into the red.
As financial pressures multiplied, 44 per cent of adults said they would be in much better shape financially if they had been taught basic money management skills such as budgeting.
Problems were particularly acute among young people, with more than two-thirds, 68 per cent, saying a lack of money management skills had been a key factor in driving them into debt.
The poll of 4,000 UK adults was carried out by Opinium on behalf of the Centre for Social Justice, a think-tank. This week, it launched a call for evidence into how financial literacy could be boosted across the generations, including a root and branch review of how financial education is taught in schools.
“The cost-of-living crisis and fast-changing nature of the financial landscape brings an added urgency to the need for better education, as new financial products are developing faster than they can be regulated,” said Joe Shalam, policy director at the Centre for Social Justice.
The huge growth of “buy now, pay later” services during the coronavirus pandemic is of particular concern, with tighter regulation expected from government later this year.
Almost one in 10 survey respondents confessed to putting their Christmas purchases on credit, using digital services such as Klarna and Clearpay to spread payments across several interest-free instalments. This rose to nearly one in five among 18 to 34-year-olds.
“Our concern is that people aren’t equipped with a rounded understanding of what happens if you’re unable to pay,” Shalam added, noting the dangers of debts becoming unaffordable owing to “layering different forms of credit which are not fully connected within the financial ecosystem”.
Internationally, the UK scores poorly on financial literacy compared with other developed nations, with 24m adults admitting they lack confidence in managing their cash, according to the government’s Money and Pensions Service.
Last year, the Financial Times supported the creation of a charity, the Financial Literacy and Inclusion Campaign, to raise awareness and lobby for change.
Although the government recently committed £560m to improving adult numeracy, the Centre for Social Justice said that financial education was an issue that had fallen down the political agenda.
“Better financial education is mutually beneficial, yet it isn’t on the map in the way we would like it to be,” Shalam added.
The last big policy intervention was putting financial education on the National Curriculum in England in 2014, but its effectiveness has been stymied by patchy provision, a lack of common teaching standards and the struggle to find class time.
“Financial education must be seen as a core element of the government’s skills agenda and must be firmly embedded in our education system,” said Robert Halfon MP, chair of the education select committee.
Although improving financial education in primary and secondary schools was a key part of the solution, the Centre for Social Justice stressed that the need for better money management skills was a “cradle to grave” issue.
“Effective early intervention in schools is crucial, but for plenty of people that’s already too late,” Shalam added, stressing the benefits of a “mid-life financial MOT” for workers looking ahead to retirement, as well as educating older consumers about spiralling online fraud.