People believe they were taught too little about money matters at school, a new study has shown. Research from impact investment firm, BlueSphere found more than nine out of ten people (92 per cent) had no idea what national insurance was.
Most also don’t know what Inflation (86 per cent) and APR (72 per cent) means or what ETFs (84 per cent) are. This comes as three quarters of Brits expressed that they don’t feel like they were taught enough at school or university to manage their finances - and over half wish they had more knowledge about savings and investments.
The most important things people wish they’d learnt about include how to invest your pensions, making savings on utility bills, and trading on the stock market. Mark Armstrong, founder of BlueSphere, said: “It’s quite staggering how little people understand about their day-to-day finances.
"With people’s pockets set to be squeezed with the National Insurance rise in April and spiraling inflation, it’s more important than ever that people know how to manage their money. We want to call an end to financial illiteracy and encourage schools, businesses and colleges to teach people at an earlier age how to make important financial decisions like investing for the future.”
The research further revealed how conscious society has become in a post-covid world, with half claiming they’d like to invest in businesses that have a positive impact on society. Yet, over two-thirds have not heard of impact investment.
Out of those who’ve heard of it and do understand what impact investing is, a quarter think that it avoids fossil fuels and in the tobacco industry - despite most impact funds allowing indirect investments into these industries.
Mark Armstrong added: “IFAs should be taking the lead to help educate clients and the public, bringing clarity to what is often a complex and jargon filled area. In an age of greenwashing, it’s more important than ever that we give customers a full picture so they are not misled and can make decisions off their own backs.”
So what do all these terms mean?
National Insurance: National Insurance is money paid to the Government by companies and workers and it pays for things such as the NHS, unemployment, disability and sickness benefits.
Inflation: Inflation is the term used to describe the increase in prices over time. How quickly those prices go up is called the rate of inflation, and is usually driven by the purchasing power of a currency. So, if the value of the British Pound decreases, prices of goods increase as you'd require more money to be able to purchase them.
APR: Annual percentage rate (APR) is the rate used to help you understand the cost of borrowing money for a year. It includes the standard fees and interest you’ll have to pay.
ETFs: An Electronic funds transfer is the electronic transfer of money from one bank account to another, either within a single financial institution or across multiple institutions, via computer-based systems, without the direct intervention of bank staff.
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