Prioritising financial education will add £200bn to the UK economy by 2050
Prioritising financial education will add an extra £6.98 billion to the UK economy each year – £202 billion by 2050.
If all adults had the opportunity to receive financial education when they were school age, the boost to annual business formation in the UK could amount to an additional 76,400 businesses each year.
This would result in an annual increase of 123,000 direct jobs which could reduce unemployment in the UK by over 8%*.
The study by GoHenry found that Brits who didn’t receive financial education as a child are now more likely to be unemployed or earning less than the national average:
- Of those currently unemployed and actively seeking work almost half (41%) didn’t receive any financial education vs 1 in 10 who did
- Nearly half (46%) of those who didn’t receive any financial education as a child are earning £15,000 or less annually, less than half of the national average income
- Of those earning between £55,001-£65,000, more than three-quarters (77%) received some level of financial education, nearly twice the national average income
Those who received financial education as children are also likely to be far richer in retirement. Adults who learnt money lessons are saving on average 43% more into their pension plans per month compared to those who did not.
The increase in the average pension pot for someone saving £149 per month compared to someone saving £104 per month would amount to £71,250 over a 40-year working lifetime. Someone earning the national average would need to work more than two years extra to make up this shortfall.
Adults who don’t learn about money when they are young are also less able to save and more likely to fall into debt.
Over half (51%) of those who received financial education as a child have up to £5,000 cash savings in an ISA or savings account compared to under a third (30%) of those who didn’t. 40% of those who didn’t receive financial education said they have no savings at all and can’t afford to save. They could also be getting into debt via missed payments.
To help address the financial literacy gap, GoHenry has launched “Money Missions’, an in-app experience providing gamified financial education lessons, designed to make learning about money a fun and interactive experience for kids and teens. Developed with teachers and financial education experts, including UK charity MyBnk, each lesson is linked to national financial education guidelines.
The table below sets out a calculation of what such a difference in savings effort could mean in a working lifetime.
|Average monthly savings into pot||Final value of pension pot at age 67**|
**Calculation assumes that the average annual growth rate of the pension pot (i.e., the value of the funds invested) is 3% per annum.
Further research findings:
- 79% of adults who didn’t receive financial education have fallen behind on utility bills or council tax payments over the last six months. 20% of those who received financial education said they would comfortably be able to pay for an increase of £100-£199 on monthly bills, but only 10% of those who didn’t receive any financial lessons said the same.
- A fifth (20%) of those who received financial education said it would take them a short amount of time, from 7 months to one year, to save up to £20,000 for a big expenditure such as a wedding, car or a trip abroad. Almost a third (31%) who didn’t receive financial education when they were younger said that saving up for a big sum like £20,000 is unachievable for them.
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