The cost of living crisis has increased understanding of the ins and outs of our personal finances.
However, with the world of finance fraught with confusing terminology, it’s no surprise that many of us regularly feel overwhelmed.
To find out how much Brits really know about their finances, Shepherds Friendly quizzed 2,000 consumers across the UK on the topic of ISAs, investing and general personal finance.
Only 27% of Britons have passed a financial literacy test, meaning nearly three-quarters of Britons have financial literacy
In a UK test of questions on International Standards of Review, investing and general personal finance, Shepherds Friendly found nearly three-quarters of people struggled with basic financial literacy with only 27% of respondents getting half or more of the test questions right.
Breaking this down by topic, it may come as a surprise that respondents reveal that they know the most about investing, followed by International Accounting Standards and General Personal Finance. With investing becoming an increasingly popular and accessible way to build wealth, this may explain why the British have the best knowledge in this area.
The test also revealed that men in the UK are more financially literate than women, with 31% getting half or more of the questions right compared to just 24% of women. Meanwhile, those over the age of 55 scored the best on the test (scoring 35%) while those between the ages of 18 and 24 scored the lowest (17%).
Southampton residents are the most financially literate in the UK
Those in Southampton prove to be the most financially literate Britons with 38% answering test questions correctly. Southampton is followed by Cardiff in second place and Liverpool in third place.
Meanwhile, Glasgow came in as the least financially literate city with only 16% of respondents getting test questions right. This city is followed by Sheffield and Belfast
Only one in three Britons put their savings into an ISA account, with more than a quarter keeping their savings in a checking account.
With ISAs being one of Britons’ weakest knowledge areas, the study found that only one in three put their savings into an ISA, with people aged between 18 and 24 being the least likely to do so. Meanwhile, over 50 are putting their savings into other types of savings accounts.
Shockingly, more than a quarter of them admit to keeping their savings in a checking account where their savings fail to yield interest.
Gen-Zs mostly provide information on personal finance topics from TikTok with a quarter of them turning to the app for guidance
While the survey also reveals that Brits mostly source information about personal finance from their banks, it may come as no surprise that Gen-Zs mostly get information on personal finance topics from TikTok.
Meanwhile, TV shows (such as The Martin Lewis Money Show) are the second most popular way for Brits to gather information on personal finance topics, and the most popular way for those aged 55 and over to get their information on money-related topics.
“It’s never been more important to take the time to understand our personal finances and ensure we use ways to help grow and protect our savings,” says Derenice Lee, Shepherds Friendly Chief Financial Officer.
Our study shows that there are areas of personal finance that many people struggle with. In particular, we found that individuals lack confidence in their knowledge of ISAs. Whether you’ve never tried to save before or you’re struggling to manage a realistic savings goal, there are simple steps you can take to help grow your personal finances without feeling overwhelmed. At Shepherds Friendly, we’re here to help you better understand and grow your personal savings with a range of available ISAs depending on your savings goals. “
For more information, see the full results here: https://www.shepherdsfri friendly.co.uk/resources/money-literacy-test/