A recent report has suggested that people in the UK’s financial skills are excessively low- with 20% of adults stating that they do not know how to read a bank statement.
The report was carried out by the Money Advice Service. It also revealed that 40% of UK adults have lower than £500 stored away in savings, which means that they are at a high risk of financial instability if something unforeseen were to happen.
The organisation has now set out a plan for the next 10 years that will focus on upping the financial skills of people across the country. The aim will be to direct advice at people as they progress through certain key periods in their life.
The chairman of the Money Advice Service’s Financial Capability Board, Andy Briscoe, commented to say:
“This is a problem first and foremost for the individuals concerned and for their families, but it also has wider implications for society and the economy,”
“The stubbornly low levels of financial capability in the UK can no longer be tolerated.”
Included in the research was a poll of 5,000 members of the public and a series of consultations with various other institution within the industry.
The report showed that nearly one-third of the people who were questioned were unsure of how to calculate a simple interest rate. It also revealed that approximately eight million adults across the country had problems with their debt. However, it also estimated that only one in six of these individuals were looking for advice to help them deal with the issue.
The report also concluded that there is now a culture across the UK that is based around the ideology of “spend today, rather than save tomorrow”. It went on to say that a huge amount of people in the country were not financially placed to deal with unexpected changes to their personal situation.
The new approach is due to be set out on Wednesday but the organisations responsible for its composition have ruled out setting any specific targets this early on. The reason for this is believed to be the fact that the strategy’s effectiveness is not yet known and, as a result of this, specific targets would be rather arbitrary in their nature.
In the background of the release of this report, it is understood that the Money Advice Service is preparing for a review of its own that is to be carried out by both the Financial Conduct Authority and the Treasury. The association is government funded and also free.
In recent times, a review into the organisation said that the institute needed to be more targeted in the work that it approaches and also concluded that the service should seek to cut its costs where possible.
This news comes as the governor of the Bank of England hinted that there may be an increase in interest rates at some point in 2015. This is likely to please people who do have a bit of money saved away.