For a lot of us, money management and the financial perils that go with it are beyond our comprehension. Unsecured Loans, secured loans, APR, ‘teaser rates’, pensions, mortgages, savings and investments, stocks and shares, how much do we really understand? Furthermore what are the implications in later years on our ability, or lack of it to budget for the household bills and outgoings? Would we benefit from money management lessons?
Recent research from NS&I shows that 52% of us feel “out of our depth” when it comes to managing our money, and 36% are confident managing money day to day, but feel that they would benefit from formal financial education classes.
The research also confirmed that 52% of those without any savings, as well as 58% of those who save regularly had never received any financial education. Overall therefore, 45% have never received any form of structured financial training and of those that did; only 36% said they received advice about the importance of savings.
Jill Waters of NS&I claims the research shows that “millions may be struggling without a basic knowledge of money, savings and how to plan for different life stages,” and that “getting a good understanding of personal finance will help people make more informed decisions.”
But what do people want to learn? The research concluded that budgeting is the key topic with 55% wanting to learn and improve skills, followed by 33% on the importance of savings, and then 31% on how to plan and save for retirement. The topics deemed the least importance were making a will with just 13% of respondents wanting advice, understanding benefit entitlement with just 9% and then handling redundancy at 4%, despite the fact that these scenarios are fairly common and complex.
There are certain aspects of finance that people find especially complex. The stock market being the most complex aspect of personal finance, with 27% or respondents claiming they have no knowledge or understanding in this area whatsoever. Indeed, 11% stated that they had problems with planning and saving for retirement. However 25% of those questioned believed that the right kind of education could make a huge difference in the understanding of saving and investments, with 12% of those that have received formal financial education saying it has already helped them to save smarter.
Many people are calling for such education to be incorporated into schools as part of the curriculum. A whopping 87% think that primary school children should receive some form of financial education to help them in the future, and only 15% or respondents received financial education at secondary school. 40% believe that educating children should be down to the teachers, whereas 24% think it should be the responsibility of the parent or family members. But given the lack of knowledge and understanding admitted to by the research findings, is this really the best idea? Many adults are unable to grasp the terms and conditions of an unsecured loan, let alone explain stock and share investments to a child.
However, many people are now asking for help as they realise the importance of such education. 36% of the respondents would speak to a family member about a financial problem they didn’t understand, and a further 24% would seek professional help. 21% also believe that children should learn about finances from professionals.
NS&Is Jill Waters agrees and suggests that people “do their research when it comes to making a financial decision [and] speak to a trusted adviser if appropriate”. If you can, try and educate yourself about key financial matters so you are better able to cope when issues arise.