Survey reveals shocking financial literacy gap among Brits

 

A survey of 2000 Brits conducted by Sovereign Boss reveals striking insight into the nation’s financial literacy, highlighting a significant gap in financial education.

 

We asked our survey participants if they understood the following 5 financial statements that most of us come across every single day. Surprisingly, 38% of respondents got all 5 of the questions below wrong.

On top of that, we wanted to understand a little more about brits and their spending habits for 2024.

 

• 45% of respondents say that they would rather spend savings on travel before purchasing a home.

• 21% say they never see themselves being able to purchase a home.

• 32% of brits say they’re relying on inheritance to be able to buy a home.

In a previous survey we conducted in 2023, 32% of Brits aged 60+ say they don’t have any savings put aside for their children.

 

Finance Expert Bert Hofhuis, from Sovereign Boss, simplifies the common financial jargon that our participants couldn’t understand.

 

What is ‘Annual Percentage Rate’? (APR)

 

Commonly Used Statement: “The APR for this credit card is 19.99%.”

Simplified: This means the yearly cost of borrowing money on the credit card, including interest and fees, is 19.99% of what you owe.

 

What is Asset Allocation

 

Common Statement: “Your asset allocation should align with your risk tolerance.”

Simplified: This refers to how you divide your investments among different types like stocks, bonds, or cash, based on how much risk you’re comfortable taking.

 

What is Compound Interest:

 

Common Statement: “Your savings account earns compound interest.”

Simplified: This means you earn interest not only on the money you deposit but also on the interest that money earns.

 

What does Diversification mean?

 

Common Statement: “It’s important to diversify your investment portfolio.”

Simplified: This means spreading your investments across various types to reduce risk.

 

What does Equity mean in your home?

 

Common Statement: “You build equity in your home as you pay off your mortgage.”

Simplified: This refers to the part of your home you truly own – the value of your home minus what you still owe on your mortgage.

 

Hofhuis says:

 

“Understanding these terms can demystify the world of finance and empower individuals to make more informed decisions. The reliance on technology underscores the need for more accessible financial education and resources to bridge the knowledge gap.”