Four out of 10 adults are not in control of their finances according to the Money Advice Service’s new financial capability survey.
- Around four out of ten adults are not in control of their finances
- One in five cannot read a bank statement
- Four in ten adults have less than £500 in savings
- One in three cannot calculate the impact of a 2% annual interest rate on £100 in savings
Leading figures from across the financial services industry, government, third sector organisations and charities have come together to launch a major initiative to address the stubbornly low levels of financial capability in the UK.
The Money Advice Service, in conjunction with the UK Financial Capability Board, recently published a 10 year Financial Capability Strategy which aims to improve people’s ability to manage money well day to day, prepare for and manage life events, and deal with financial difficulties. Its focus will be on developing people’s financial skills and knowledge as well as their attitudes and motivation.
Based on extensive research among 5,000 people and consultation with key organisations and institutions, the Financial Capability Strategy spells out in stark terms the problems the nation faces and the approach we must take to resolve them.
Key research findings include:
- only half of families have any life cover
- 21 million don’t have a modest £500 in savings to cover unexpected bills like replacing the fridge or mending the car
- 19 million don’t have an approach to budgeting that they feel works
- around 8 million have problems with debt: of those, just one in six is seeking help
In practice this means a “spend today rather than save for tomorrow” culture, limited financial resilience to deal with unexpected life events, and financial difficulties that are closely associated with mental health problems.
To address this, the strategy focuses on every key life stage and challenge: children and young people, young adults, working age people, savings, retirement planning, older people, and people in financial difficulties. Specific actions for the devolved nations will be delivered in Scotland, Wales and Northern Ireland.
The strategy is built around two key concepts :
- Collective impact and cross-sector co-ordination rather than isolated interventions
- Testing and learning to determine what works in order to deliver evidence-based interventions : resources will be steered towards activities on the basis of what is proven to work.
Overall progress will be monitored by a Financial Capability Survey and on going evaluation of specific interventions.
Commenting on the launch of the Strategy, Andy Briscoe, Chairman of the Financial Capability Board said:
“Four out of ten adults are not in control of their finances, so for a great many people money is a constant source of worry and stress. This is a problem first and foremost for the individuals concerned and for their families, but it also has wider implications for society and the economy. The stubbornly low levels of financial capability in the UK can no longer be tolerated. Today we are calling for a fully collaborative approach to ensure we achieve the goals set out in the Strategy over the next decade.”
Read the Financial Capability Strategy in full