Financial illiteracy ‘costs £3.4bn’
A “disgraceful” lack of financial education is costing the UK around £3.4 billion a year, a report has warned.
The cost to the taxpayer of subsidising the retirement of people who have not saved enough for their later years could be slashed by a third if more were done to combat “financial illiteracy”, the study for consumer help website MoneySavingExpert said.
The report looked at how people armed with better financial skills would be more likely to plan their retirement effectively, boost their job prospects, steer clear of excessive debt and spend their cash more wisely.
The amounts of money lost through mis-selling scandals would be cut and £600 million a year could be wiped off Government subsidies to unemployed households, according to the research compiled by the Centre for Economics and Business Research (CEBR).
The findings come a year after an e-petition signed by more than 118,000 people forced Parliament to debate the possibility of putting financial education on the national curriculum.
The petition, submitted by MoneySavingExpert.com founder Martin Lewis, supported work carried out by the All Party Parliamentary Group on Financial Education for Young People.
Mr Lewis said: “It’s a national disgrace that for over 20 years we’ve educated our youth into ‘debt’ when they go to university, but never about debt.
“The cost of not equipping young people to become responsible consumers is huge compared to the trivial price of adding financial numeracy to the maths curriculum and money awareness to PSHE (personal, social, health and economic education). Never mind the added boon that talking money in maths actually helps boost numeracy.”
The report is published at a time when families face further squeezes to their living costs, including soaring energy bills and rents, and they are struggling to make any real returns on their savings amid plunging rates.
The Government is also trying to tackle the pension savings crisis amid fears that people are failing to put aside enough cash to live comfortably in their old age. A landmark scheme to eventually automatically enrol up to 10 million people into workplace pensions began this autumn.
What are your views on this … do you have sufficient financial skills to plan for your retirement?
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