• Up to 70% of UK adults answered GCSE level personal finance questions incorrectly (the equivalent of up to 34 million people) with 30% scoring 43% or less
• Despite this lack of financial awareness, almost half (22.6 million) of consumers never budget; one in ten simply can't be bothered, 5% are in the red and see no point and 4% don't know how to do one
• As a direct result of poor financial management, 42% of consumers admit to suffering from stress, anxiety and sleepless nights. This figure increases to 60% of 25-34 year olds, the most affected group
• With personal finance hitting the national curriculum in September, 35% of parents plan to brush up their knowledge to keep up with their children but 11% will delegate household finances to the kids
• Help is at hand as The Open University Business School's True Potential Centre for the Public Understanding of Finance (PUFin) has launched a unique and interactive eight week online course to help consumers navigate the personal financial maze completely free of charge
New research released today by The Open University Business School (OUBS) reveals that, despite the economy's promising signs of recovery, consumers are still struggling to understand personal finance basics with up to 70% (34 million) of UK adults unable to answer GCSE level questions correctly. These questions, which covered everyday financial issues such as savings, tax, currency exchange and utilities, beat 30% of consumers who scored 43% or less in the test. The findings come from OUBS' dedicated research centre, The True Potential Centre for the Public Understanding of Finance, an initiative instigated and supported by True Potential LLP.
With personal finance hitting the national curriculum in September 2014, the survey of 2,024 UK adults aged 18 and over found that 35% of parents plan to brush up their personal finance knowledge in order to keep up with their children. Over one in ten (11%) claim they will pass the household finances over to the children to manage on the strength of their new-found knowledge. A further 6% will simply rely on their children for financial advice.
Consumers admit that their current lack of financial knowledge stops them from making informed decisions around mortgages (44%) and pensions (43%) right down to everyday products such as ISAs (32%) loans (29%) and credit cards (20%). The research also suggests ignorance really isn't bliss, with 42% of people admitting that their personal finances give them stress, anxiety and sleepless nights. This figure rises to 60% for the 25-34 year old age group and falls to just 29% for the over 55s.
The research also investigated basic financial planning such as household budgets. This revealed that almost half of all UK adults (46%) never keep a household budget claiming they can't be bothered (9%), they're always in the red so don't see the point (5%) or simply don't know how to do one (4%).
A third of consumers suffer a monthly deficit with more going out than they have coming in. For these people, a simple household budget could be the lifeline they need as 11% of those surveyed see a shortage of just 10% in their monthly budget – enough to create huge financial problems over the long term but small enough to rectify with some careful financial management. This leads to more than one in seven adults (14%) regularly exceeding their agreed overdraft and incurring significant bank charges, adding to their financial woes.
Director of the True Potential Centre for the Public Understanding of Finance (PUFin) at the OUBS, Martin Upton said:
"The results of our recent survey paint a worrying picture for UK families, who are struggling to manage their finances despite signs of economic recovery. Many households face a financially devastating deficit each month, with bills outstripping income. Many other households have very little left for savings.
"In response to this distressing state of affairs, and with financial education becoming compulsory in schools from September, The Open University Business School and True Potential PUFin Centre is launching a new free course which begins next week. Managing Your Money is a Massive Open Online Course (MOOC) which takes place over eight weeks and will help families better understand and manage their finances; as well as keeping pace with their children, as they begin their new financial curriculum in September 2014."
Supported by True Potential LLP, Managing My Money, the first course to be created at PUFin, will be available free of charge to the general public via the OU's online social-learning platform, FutureLearn. An array of audio-visual clips, interactive discussions and quizzes, and engaging resources will be offered on a weekly basis.
David Harrison, Managing Partner of True Potential LLP and a graduate of the OUBS himself having completed an MBA in 1992, has been instrumental in the formation of PUFin. He said:
"Investing and finance can be simple-to-understand subjects that are frequently made very complicated and inaccessible – we have set up this centre to democratise finance and make financial education more readily available."
David adds: "These free courses will arm people with the knowledge and information they need to make informed decisions about their finances, or to ask the right questions of the right people. This will inevitably go a long way in helping to close the growing savings gap that exists in the UK today."
The Managing My Money course is intended for those with an interest in developing their personal financial capability but who do not have previous experience studying the subject. Lasting eight weeks, learners are expected to commit to around three hours of study each week. Managing My Money, will be starting on Monday 12 May 2014. For more information on the course and FutureLearn or to register visit www.futurelearn.com/courses/managing-my-money.
The course will also be available through The Open University's free education platform, OpenLearn in the autumn 2014. Registration for the course must be by Sunday 25 May 2014 (midnight) at www.futurelearn.com/courses/managing-my-money.