A new study launched by Compare the Market and MyBnk, in collaboration with the Centre of Economics and Business Research (Cebr), has revealed that a staggering 59% of young adults in the UK are not financially literate.
The research highlights a serious gap in financial education, suggesting that the majority of young people are poorly equipped to make sound financial decisions as they transition into adulthood.
The study found that nearly two-thirds of young adults do not recall receiving any financial education at secondary school. Of those who did receive financial education, the average time dedicated to this important subject was just 48 minutes per month, or a mere 11 minutes per week.
Despite financial education being on the curriculum for UK secondary schools, the study found that 80% of schools, including academies and free schools, can choose not to provide financial education. This decision not to educate students about finances is leaving only two in five young adults, or 41%, considered financially literate according to the Compare the Market and MyBnk’s Financial Education measure.
The research recommends increasing the amount of financial education delivered to 11-18-year-olds to at least 3.4 hours per month. The study suggests that this level of education could significantly boost financial literacy among young people, allowing them to better navigate the financial decisions they’ll encounter in later life.
Those young adults who did not receive financial education at school but were nonetheless financially literate largely attributed their financial understanding to education from parents or carers. This finding underscores the need for financial education to extend beyond the classroom, involving parents, businesses, and the wider community.
The research also revealed a strong correlation between time spent on financial education in school and financial literacy. By enhancing financial education, more individuals could better manage their day-to-day spending, which could positively impact the UK economy. To ensure a majority of young adults are financially literate, the research suggests a 44% increase in current literacy levels, achieved through at least 3.4 hours per month of financial education for 11- to 18-year-olds.
Both Compare the Market and MyBnk have urged policymakers, businesses, households, and schools to consider the research’s findings and recommendations seriously. Improving financial literacy among young adults is key to ensuring they have the skills necessary to manage their finances effectively as they transition into adulthood.
