The vast majority of the UK population (87%) claim they are comfortable managing their personal finances and are confident in their understanding of financial vocabulary (69%). However, one in four (23%) are unable to explain what a mortgage or interest rate is – according to new research.
The study, carried out by FX trading training company Samuel & Co. Trading, found that less than half (40%) could confidently explain the terms ‘stocks & shares’ and ‘insurance premium’. Meanwhile, when it comes to financial abbreviations, only one in six Brits (17%) could explain what an ISA is, and only a third (35%) are comfortable explaining APR.
Of those claiming to be savvy with their money few are planning for their financial futures – nearly half (46%) don’t know how much they pay into their pension, just under a quarter (24%) don’t have any emergency savings and over half (52%) don’t have a 5-year plan for their finances.
18-24-year-olds are the least comfortable with their finances – less than half of them (46%) understand the T&Cs of their credit card, and over half (57%) don’t know how much they pay in tax each month.
Samuel Leach, Founder of Samuel & Co. Trading, said:
“It’s quite shocking to learn that over half of the population don’t have a solid financial plan in place – there’s clearly a difference between thinking you have your finances in order and the reality of your savings!
“Understanding basic financial vocabulary is a vital part of learning to be savvy with money, and underpins some of the most important financial decisions we make, like finding an affordable mortgage or signing up for a credit card. While free training on these basics is available, I believe a lack of understanding stems from these terms not being taught at school – more needs to be done to ensure young people grow up with a better understanding of the financial world.”