The UK is 'below average' at teaching financial literacy, study finds

11th October 2016 at 23:01
Only 38 per cent of people understand inflation and only 69 per cent carefully consider purchases, according to the OECD

The UK is below average at teaching financial literacy, according a new report which ranks it 15th out of the 30 countries.

The Organisation for Economic Cooperation and Development (OECD) report is based on adults’ financial literacy, behaviours and attitudes.

The UK was ranked behind Estonia and Latvia, and ahead of Thailand and Albania. The highest scoring country was France.

Across all countries, the majority of people understood what would happen to purchasing power if inflation stayed at the same rate for a year. However, only 38 per cent of those in the UK did.

Most people agreed or completely agreed that they carefully considered purchases, but only 69 per cent of people did in the UK – one of the lowest proportions across all the countries.

Short-term attitude

The research was carried out in response to concerns that adults in many countries around the world displayed low levels of financial knowledge, failed to engage in financial behaviours that could improve their financial security and had a short-term attitude to their money.

Overall, a particular concern was the low level of understanding of the accumulation of interest on savings.

Even in the highest scoring countries, at least one in five respondents could not calculate the balance of an account after 2 per cent interest had been added.

And, with the exception of adults in Hong Kong (52 per cent), the Netherlands (56 per cent) and Norway (58 per cent), only a minority were also able to correctly identify the impact of compounding on such interest payments over time.

Financial knowledge also varies by gender. In 18 of the 30 participating countries and economies, men were statistically significantly more likely than women to achieve a high score on the financial knowledge questions. 

Crucial role of schools

The OECD report highlights the importance of starting financial education early and the crucial role played by schools.

It says that, if effective, this would "ensure that future generations have the knowledge, skills and attitudes necessary to strengthen their financial wellbeing and build positive habits from a young age".

It adds: "Schools can also assist children and young people in developing the skills and attitudes that will help them to achieve financial wellbeing, and encourage positive habits and behaviours such as making spending plans, saving and planning ahead."

The countries included in the analysis were: Albania; Austria; Belarus; Belgium; Brazil; British Virgin Islands; Canada; Croatia; Czech Republic; Estonia; Finland; France; Georgia; Hong Kong, China; Hungary; Georgia; Jordan; South Korea; Latvia; Lithuania; Malaysia; Netherlands; New Zealand; Norway; Poland; Portugal; Russian Federation; Thailand; Turkey; UK.

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