• A quarter of UK adults (26%) say they have never learned how to manage their finances and plan for the future
  • Friends and family are most often credited as where people learned how best to manage their money and plan for the future, however, those who spend time learning from freely available expert information as well were found to be almost 50% better off 
  • While knowledge is power, confidence is key as regardless of income, financially confident people are better off… to the tune of £84k

February 22, 2024: Low levels of knowledge and confidence around money and finances are putting two-thirds of UK adults at a financial disadvantage, to the sum of £65,000 over the course of their lives to date, according to brand new research from digital wealth manager, Moneybox. If these consumers were better supported to make financial decisions with greater confidence, this could equate to a potential £2trn of spending power to the UK economy.

The research – which compares the current net worth of individuals across the UK based on their attitudes and behaviours towards money, spanning cash savings, investments, retirement savings, and debt1 – was commissioned to help identify how people could be better supported to achieve their financial goals and improved financial outcomes in life.  

The study found that only 32% claim to be very confident in managing their personal finances. And 64% of Britons believe they have missed out on financial opportunities in life, with 35% blaming a lack of financial knowledge specifically, and 29% citing low financial confidence.

The enduring legacy of poor financial education 

Because most people in Britain never received any financial education in school, most have been left to figure out how to manage their finances and plan for the future through trial and error. In fact, more than a quarter of those surveyed (26%) do not feel they have ever learned how to manage their finances. Of those, 21% admit they do not know where to start, 17% find it overwhelming and 16% revealed they struggle with financial jargon being too confusing. 

Among those who feel they have educated themselves on financial matters, 6 in 10 (61%) have turned to their friends and family for guidance and advice. 47% have learned via freely available financial information online or in the media. In terms of more formal advice, more than a quarter (22%) learned financial skills through work or study, and 14% have spoken with a financial advisor.  

It is interesting to note that while friends and family are most often credited as where people learned how best to manage their money and plan for the future, the quarter of respondents who said they rely solely on personal relationships to guide them in financial matters were found to be almost 30% worse off than the average.

The best outcomes come when people use a mix of personal recommendations and freely available expertise online and via the media. These people boosted their net worth by 46% compared to those who just relied on financial advice from family and friends.

Regardless of income, confidence is key 

But while knowledge is power, confidence is key – people who are more financially confident have a higher net worth, even when adjusting for income, to the tune of £84k!

The most significant factor contributing to this outcome appears to be that confident people dedicate much more time to their finances overall. For example, four out of five (82%) of this group said they always dedicate time to researching the best financial products for their needs, compared to just 3 in 10 who are somewhat confident and just 16% who are not financially confident.

More than half (52%) say they regularly take time to understand their own financial situation and the more time spent, the better the final outcome.

Those who are financially confident save and invest more money, more consistently; for example, 70% of the confident are saving monthly, and make up 96% of monthly savers – they are putting away £129 (88%) more per month than those without confidence. They are also investing 68% more per month than those that lack confidence, at an average of £1,300 more per year. 

This financial confidence gap has a dramatic impact on wealth in the UK. Looking at those who have low levels of confidence, the average net worth across individuals in the group sat £58,000 behind those that feel more confident, (£114,000 vs £172,000) which extends to a gap of £1.3 trillion across the UK. This gap grows even more for people who have no confidence at all, with the rift stretching to £84,000 behind that of a UK adult with any level of confidence (£60,000 vs £143,000).

And critically, confidence isn’t just generated by your income. The biggest cohort of the ‘confident’ earn between £25,000 and £50,000, with 69% of the group earning less than £50,000, which suggests that financial confidence and top-bracket salaries aren’t necessarily directly linked. 

Brian Byrnes, Head of Personal Finance at Moneybox commented: “When we are young, our financial lives are typically quite simple – but without pointers in the right direction and confidence in our financial decisions, opportunities can be missed and mistakes can be made. These snowball into long-term consequences, and when we are older – and often have more complicated financial situations – we can’t afford the financial advice we need. A lack of education, knowledge, and most of all confidence, is having a direct impact on the money in people’s pocket each and every day. 

“Most probably haven’t heard of the upcoming Advice Guidance Boundary Review (AGBR), but it could be revolutionary for consumer finances. It represents a pivotal moment; the financial ecosystem in the UK has the collective opportunity to overhaul how the British public is supported in navigating the complexities of personal finances, filtering the streams of information available to them, cutting out the unhelpful noise, and helping people make financial decisions with more confidence. Not only will this benefit each individual at a personal level, but it has the potential to add a whopping £2trn of spending power to the UK economy.”

 

END –

Notes to Editors:

  1. This excludes student loans and property and was adjusted for age and income level

Methodology 

Consumer research was conducted by One Poll on behalf of Moneybox from December 29th 2023 to January 9th, 2024. A nationally representative sample of 4,055 adults across the UK participated in the survey.

The net worth analysis amalgamated the survey responses across all cash, investments, and retirement, less debt (excluding student loans) to calculate net worth at the time surveyed. It then tracked that net worth against responses to financial confidence, education, and missed opportunities per person. All averages are weighted averages by age bracket and household income bracket – anybody with no household income was excluded from the analysis. 

About Moneybox:

Moneybox is the award-winning app on a mission to help people build wealth with confidence so they can enjoy life, today and tomorrow. Launched in 2016 by co-founders Ben Stanway and Charlie Mortimer, the company has experienced rapid growth, and today has over £6bn in assets and a community of more than 1 million customers. Moneybox provides a range of great value products and services, across saving, investing, home-buying, and retirement as well as helpful tools and educational content, to help people manage and achieve their short, mid, and longer-term financial goals. Moneybox enables customers to set money aside in the way that suits them best using round-ups, regular deposits, or instant payments. In March 2022 Moneybox raised £35m in a Series D funding round, led by Fidelity International Strategic Ventures, existing investors Oxford Capital, CNP, Burda and Breega, plus new investor Polar Capital. This brings total funds raised by the digital wealth manager to £100+ million.