A new study has found that more than one in four people in the UK don’t feel confident when it comes to handling their personal finances.
The research, carried out by debt management company Lowell and shared with City A.M. this evening, found that just a third of people claim to feel “very confident” when handling their finances. This then falls to just 19 per cent of young people, aged 16-25.
The research also found that a significant number of Brits don’t understand key financial terms such as ‘overdraft’ (44 per cent), ‘mortgage’ (46 per cent) and ‘arrears’ (52 per cent).
Financial education from a young age could be the key to helping young people better prepare themselves financially, as 84 per cent of Brits believe that being taught about finances at school could help prevent financial issues in the future.
Friends, family and social media
Confusion over personal finances could be linked to the varied sources from where Brits look for financial advice.
When looking for financial advice, over a third (36 per cent) of Brits say they would go to their bank whilst 35 per cent would see a financial advisor. However, a quarter rely on family and friends for advice, and 9 per cent use social media.
Young people seem to be struggling when it comes to understanding their personal finances.
Nearly half wouldn’t say they were confident with their finances, and one in 10 claim to have no confidence at all in their own understanding of personal finance.
Just a fifth of those aged 16-24 knew what an overdraft was, and only 5 per cent claimed to know the meaning of arrears.
As well as this, young people are more likely to use social media platforms like TikTok and Instagram to access financial advice than go to a bank.
Hannah Cribb, 22, from Liverpool, agrees that she lacks confidence when it comes to her finances
“I have a bank account and a student overdraft, and I know my wages get paid into my bank account, but that’s about it. I don’t have any loans or credit cards, and I wouldn’t even know where to start looking if I wanted one. I would feel stupid going into my bank as I would have no idea what to ask for,” she said.
“I sometimes watch TikTok videos about financial advice but it’s more about money-saving tips and that kind of thing. If I needed a loan or anything I’d probably just ask my mum where she would go and do the same,” Cribb concluded.